FedEx stock drops after mixed earnings results

FedEx reported $22.2 billion in revenue for its third quarter of fiscal 2025, up 1.9% from the corresponding period in 2023. The company reported $19.2 billion in revenue for FedEx Express, up 2.7% year over year, and $2.1 billion in revenue for FedEx Freight, down 5.3% YoY, according to the company’s earnings report, released March 20 for the quarter that ended Feb. 28. [caption id="attachment_57149681" align="aligncenter" width="1920"] (Courtesy/FedEx)[/caption] “We navigated many headwinds in this third quarter, including a volatile demand environment, the postal service contract expiration, severe weather events and inflation,” FedEx President and Chief Executive Raj Subramaniam said on the March 20 earnings call. The loss of the U.S. Postal Service contract to UPS resulted in a “$180 million headwind to adjusted operating income” in Q3, but is expected to ease in Q4, Chief Financial Officer John Dietrich said on the call. Bad weather cost the company about $70 million. The integrator noted several fleet changes in a 10-Q filing with the U.S. Securities and Exchange Commission on March 20. FedEx has: Postponed the retirement of its MD-11F fleet by four years; Agreed to purchase two used 777Fs and firmed up options to buy eight new 777Fs; and Firmed up options for ten additional ATR 72-600Fs. Read more about FedEx’s fleet changes here. Fiscal 2025 outlook FedEx revised its fiscal 2025 outlook and expects revenue to be flat to slightly down YoY, while its outlook following Q2, which ended Nov. 30, 2024, was for revenue to stay flat, according to the earnings report. The integrator reduced its fiscal 2025 diluted earnings per share forecast to $18 to $18.60 from $19 to $20. “Our revised earnings outlook reflects continued weakness and uncertainty in the U.S. industrial economy, which is constraining demand for our business-to-business services,” Dietrich said. Q3 results FedEx reported $1.3 billion in operating income, up 3.9% YoY. It also reported for Q3: Diluted earnings per share of $3.76, up 7.1% YoY; Income before taxes of $1.2 billion, down 0.2% YoY; Package revenue of $17.7 billion, up 4.9% YoY; U.S. domestic package revenue of $13 billion, up 6.1% YoY; International export package revenue of $3.6 billion, up 4% YoY; and Freight revenue of $1.3 billion, down 18.3% YoY. Average daily package volume increased 5.4% YoY to 17.9 million and composite revenue per package was down 0.4% to $15.69, according to the report. FedEx moved an average of 8,017 tonnes of freight each day, a 17.8% YoY decrease, and reported a composite freight yield of $1.17 per pound, down 0.8% YoY. “Weakness in the industrial economy continued to pressure our higher-margin B2B volumes,” Subramaniam said. “This dynamic was most pronounced at Freight, where fewer shipments and lower weights continue to negatively affect our results.” FedEx Freight separation FedEx announced in December 2024 that it would spin off FedEx Freight , its less-than-truckload subsidiary. Since then, “we've set up a separation management office and established a cross-functional team to ensure a smooth transition,” Dietrich said. “Last month, we completed a very successful $16 billion debt exchange offer and consent solicitation. This will create more flexibility for both companies' capital structures as we prepare for the separation.” Shares of FedEx ( NYSE: FDX ) were down 6.37% from market open to $230.53 as of market close today. FedEx has a market capitalization of $55.5 billion. Register now for Cargo Facts' essential regional events for industry stakeholders: Cargo Facts Asia 2025 on March 24-26 at the W Shanghai in China; and Cargo Facts EMEA 2025 on May 6-8 at the Shangri-La Bosphorus in Turkey.

FedEx stock drops after mixed earnings results

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