FedEx Tops Fourth-Quarter Estimates Ahead of Freight Business Spinoff

 FedEx reported stronger-than-expected fourth-quarter results on Tuesday, boosted by higher shipping volumes and solid performance across its core delivery operations in the final reporting period before the separation of its freight business.

The logistics giant posted adjusted earnings of $6.31 per share for the quarter ended May 31, surpassing analysts' expectations of $5.96 per share. Revenue rose to $25.01 billion, ahead of market forecasts of $24.04 billion.

The results mark the company's final quarter including FedEx Freight, which officially became a standalone publicly traded company on June 1. As part of the separation, FedEx Freight paid approximately $4.1 billion in cash dividends to FedEx Corporation.

Despite the earnings beat, FedEx shares fell about 6% in after-hours trading as investors assessed the company's outlook and post-spinoff strategy.

FedEx Express, the company's largest operating segment, generated revenue of $21.57 billion during the quarter, exceeding analyst expectations. The company reported a 3% increase in domestic package volume and a similar rise in U.S. priority shipments compared with the previous year.

Net income for the quarter stood at $1.6 billion, or $6.60 per share, compared with $1.65 billion, or $6.88 per share, in the same period a year earlier. After excluding one-time costs related to the freight separation and retirement plan adjustments, adjusted earnings reached $6.31 per share.

For the full fiscal year, FedEx reported revenue of $94.7 billion, up from $87.9 billion in the previous year, reflecting continued growth in package demand and pricing improvements.

Chief Executive Officer Raj Subramaniam said the company's operational strategy continues to deliver stronger financial performance and improved cash generation.

FedEx also announced a change to its fiscal calendar, shifting its fiscal year-end from May 31 to December 31, effective this month.

Looking ahead, the company forecast full-year revenue growth of approximately 11% and projected adjusted diluted earnings per share between $16.90 and $18.10.

The company reported a significant increase in fuel expenses during the year, with costs rising to $1.43 billion from $864 million a year earlier. However, executives said higher fuel prices have not materially affected customer demand.

FedEx added that pricing across its U.S. business increased by 10%, helping offset higher operating costs and supporting revenue growth during the fiscal year.