Quarterly profits up, but tariffs dampen forecast for fiscal year

FedEx reported higher quarterly profits but expects 2026 earnings per share below estimates from analysts, as it anticipates a hit from the U.S. decision to end tariff exemptions on low value direct-to-consumer shipments.

The Memphis-based logistics giant delivered its first-quarter report on Sept. 18. It showed an adjusted net income of $0.91 billion, or $3.83 per share, compared to $0.89 billion, or $3.60 per share, a year prior.

Quarterly revenue increased $600 million to $22.2 billion from Fiscal Year 2025.

FedEx President and CEO Raj Subramaniam praised the company’s performance during difficult economic times and reinforced that the FedEx Freight separation remains on track.

“We delivered a solid quarter in line with the Q1 outlook we shared in June, despite significant volatility and uncertainty around the global trade environment,” Subramaniam said. “We also continue to make meaningful progress preparing for the spinoff of FedEx Freight, which remains on track.”

FedEx Freight is expected to spin-off in June 2026 — the company stated that the hiring process is about 50% complete.

Here are some highlights from the Q1 earnings report.

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In FY26 overall, FedEx is forecasting a 4% to 6% revenue growth rate year over year, with earnings per share of $17.20 to $19. Analysts expected an average of $18.21 per share, according to data compiled by LSEG.

FedEx also reaffirmed its forecast of $4.5 billion in capital spending, and $1 billion in savings from structural cost reductions and the implementation of Network 2.0, its network transformation strategy.

The U.S. administration on May 2 ended the century-old “de minimis” exemptions, which allowed shipments valued under $800 to enter duty free, for packages from China and Hong Kong.

Those shipments accounted for about three-quarters of roughly 1.4 billion packages that entered the United States each year under the program.

The U.S. extended the removal of “de minimis” exemptions to all countries on Aug. 29. The impact from this is expected to show up in FedEx’s results over the coming quarters.

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FedEx parcel and FedEx Freight LTL shipping rates are also expected to increase by an average of 5.9%, beginning Jan. 5. More details on the changes can be found at fedex.com/en-us/shipping/rate-changes.html.