By Abhinav Parmar and Lisa Baertlein
(Reuters) – FedEx reported quarterly profit and revenue above Wall Street estimates, as cost-cutting and strength in domestic deliveries helped offset weaker international volumes after the U.S. ended tariff exemptions on low-value, direct-to-consumer shipments.
Shares of Memphis-based FedEx climbed 5.5% in extended trading on Thursday after surprising Wall Street. Analysts had expected profit per share to fall due to the end of “de minimis” exemptions, which allowed shipments valued under $800 to enter the U.S. duty-free.
While total international average daily export volume fell 3%, overall average daily volume including domestic parcels rose 4% for the quarter, and revenue per package increased by 2%.
FedEx has been working on slashing billions of dollars in operating costs by parking planes, closing facilities and merging some of its units. It has a $1 billion cost-saving plan for this fiscal year ending in May 2026.
Those efforts helped shelter profits.
Closely watched operating margin increased to 6% from 5.2% during the quarter, which saw a 5% jump in domestic average daily delivery volume, fueled by U.S. consumer spending resilience despite worries about inflation and rising joblessness.
FedEx reported an adjusted profit of $912 million, or $3.83 per share, for the first quarter ended August 31, up from $892 million, or $3.60 per share a year earlier. Analysts on average had expected a profit of $3.59 per share, according to data compiled by LSEG.
Its quarterly revenue of $22.24 billion also beat analysts’ estimate of $21.66 billion.
Global tariffs, particularly related to the end of the de minimis exemption for China and Hong Kong, cut first quarter revenue by $150 million. That is expected to repeat every quarter this year, Chief Customer Officer Brie Carere said.
Combined with other revenue pressures and expenses, trade policies represent a $1 billion headwind for the year, she said.
That “is predominantly an impact of top line revenue reduction, because China to the U.S. is a very profitable lane for us,” Carere said.
FedEx forecast 2026 earnings per share largely below analysts’ estimates.
It expects full-year adjusted earnings in the range of $17.20 to $19.00 per share, marginally below analysts’ average estimate of $18.21 at the midpoint.
The U.S. on May 2 ended the century-old “de minimis” exemptions 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.
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