FedEx shares sink after profit outlook highlights tariff challenges

Key Points

  • FedEx signaled caution for the year ahead, forecasting a current-quarter profit below market expectations at $3.40 to $4 per share against an anticipated $4.06 per share, due to volatile global demand.
  • The company declined to provide full-year earnings and revenue forecasts, citing uncertainty over U.S. trade policies, especially with China, impacting shares with a premarket drop of over 5%.
  • FedEx is more exposed to China trade issues than rival UPS, with Trump's tariff policies and the end of duty-free status for direct-to-consumer shipments from China affecting trade air transit.
  • Despite the outlook, FedEx reported better-than-expected fiscal fourth-quarter results with adjusted profit at $1.46 billion ($6.07 per share) and revenue at $22.2 billion, surpassing analyst estimates.
  • Both FedEx and UPS face squeezed delivery profits as customers shift from fast air services to cheaper ground shipments, compounded by stalled industrial demand.

Summary

FedEx has expressed caution for the upcoming year, forecasting a first-quarter profit of $3.40 to $4 per share, falling short of the expected $4.06 per share, due to volatile global demand and uncertainties in U.S. trade policies, particularly with China. This led to a premarket share drop of over 5%. The company, more exposed to China trade than rival UPS, refrained from issuing full-year forecasts amid Trump's fluctuating tariffs and the termination of duty-free status for direct-to-consumer shipments from China-based retailers like Temu and Shein. Despite these challenges, FedEx reported strong fiscal fourth-quarter results ending May 31, with adjusted profit rising to $1.46 billion ($6.07 per share) from $1.34 billion the previous year, and revenue increasing to $22.2 billion, exceeding analyst expectations. However, both FedEx and UPS are grappling with reduced delivery profits as customers opt for cheaper ground shipping over air services, alongside stalled industrial demand. FedEx also announced plans to spin off its trucking business by June 2026, signaling strategic shifts amid ongoing market pressures.

yahoo
June 25, 2025
Stocks
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