FedEx guidance disappoints with tariffs weighing on demand

FedEx forecast a worse than expected profit for the current quarter, in a sign that soft parcel demand and uncertainty over global trade are unlikely to abate in the near term.  

Adjusted earnings in the fiscal first quarter will be US$3.40 to US$4 a share, the company said in a statement on June 24.

Analysts surveyed by Bloomberg had projected US$4.03, on average.

Although it typically provides a full-year forecast, FedEx said it would share its outlook only for the current quarter due to the “uncertain global demand environment”.

The forecast assumes no further negative developments in the global trade environment, the company said.

“We just simply cannot predict how that is going to play out,” FedEx chief customer officer Brie Carere said on the earnings call.

US-China shipments – the company’s most profitable trade route – “deteriorated sharply” in May and volumes are expected to remain under pressure, Ms Carere said. 

FedEx’s shares fell 4.8 per cent at 6.06pm during after-hours trading in New York.

The stock declined 18 per cent in 2025 through June 24’s close, compared with a 3.6 per cent gain by the S&P 500 index.

US President Donald Trump’s erratic trade policies continue to handcuff the ability of executives to predict where their businesses are headed.

That lack of visibility is especially challenging for FedEx – an economic bellwether – since its customers include a broad swath of industries, from manufacturing to consumer goods.

Analysts had already reduced their 2026 profit estimates for FedEx in recent months, worried that weakening consumer confidence and soft industrial demand would overshadow the company’s efforts to slash costs and revamp its delivery network.

Still, there are signs that the company’s long-running push to reduce expenses and combine FedEx’s ground and air shipping networks into a single operation is paying off.

The company achieved its goal of cutting US$2.2 billion (S$2.82 billion) in costs during its most recent fiscal year and expects an additional US$1 billion in savings in 2025.

Adjusted earnings were US$6.07 a share in the fourth quarter, topping the US$5.81 average of analyst estimates.

Higher US and international export volumes, price increases and cost reductions provided a boost, while the expiration of its US Postal Service contract along with higher transportation and wage expenses weighed on results, the company said.

The earnings report comes just days after the death of Mr Fred Smith, FedEx’s iconic founder who revolutionised the parcel shipping business by introducing next-day air service after he started the company in 1971. BLOOMBERG