Oct 28 (Reuters) – FedEx said on Wednesday its quarterly operating margin in its core US express delivery segment slipped, even as it reported a bigger than expected profit, and its shares fell 1.6% in extended trading.
The package delivery company said the margin dipped to 6.6% from 6.8% the year before. It forecast annual profit above estimates after reporting a 28% rise in earnings from the July-September quarter, driven by improved pricing, higher volumes and cost-saving measures.
The Memphis-based company said those factors were partly offset by the cost of hiring additional transportation, increased wages and compensation, as well as changing US tariff policies.
“We remain committed to disciplined operational execution to reduce our cost-to-serve while focusing on profitable growth,” CEO Raj Subramaniam said.
FedEx expects 2026 adjusted profit of $18 to $18.60 per share, above analysts’ expectation of $17.73 per share, according to data compiled by LSEG.
The company switched to reporting on a calendar basis rather than according to a fiscal year beginning in the latest quarter, following the spinoff of its freight trucking unit on June 1.
FedEx, a bellwether for global trade, reported third-quarter adjusted profit of $3.74 per share, up from $2.93 per share the year before. Share buybacks increased earnings in the latest quarter by 2 cents per share. Analysts, on average, expected earnings of $3.36 per share, according to data compiled by LSEG.
As part of a multiyear restructuring, FedEx has cut billions of dollars in costs, is combining its ground and express delivery options and automating some operations.
It also closed the sale of its supply chain subsidiary as it focuses on its core express business.
The slimmed-down company is under investor pressure to bolster profits and reduce costs as rival UPS shows early signs of making headway on those fronts.
(Reporting by Nandan Mandayam and Lisa Baertlein; Editing by Pooja Desai and Rod Nickel)
Comments