FedEx Q3 revenue up marginally at $22.2bn, outlook weak

FedEx reported a two percent increase in revenue at $22.2 billion for the third quarter ended February 28, 2025 while net income declined to $0.91 billion from $1.09 billion in the same period last fiscal.

Federal Express segment operating results improved during the quarter, driven by cost reduction benefits from DRIVE, higher base yield, and increased U.S. and international export volume, says an official release. "These factors were partially offset by higher wage and purchased transportation rates as well as the expiration of the U.S. Postal Service contract.

"FedEx Freight segment operating results decreased during the quarter due to lower fuel surcharges, reduced weight per shipment and fewer shipments, partially offset by higher base yield."

Raj Subramaniam, President and Chief Executive Officer, FedEx says: "The FedEx team delivered improved profitability, while navigating a very challenging operating environment, including a compressed peak season and severe weather events, says "I am proud of the team for executing on our transformation efforts while strengthening our value proposition and improving the customer experience. Looking ahead, we remain focused on supporting our customers amid the shifting macroeconomic environment."

FedEx completed its $2.5 billion fiscal 2025 share repurchase plan with $0.5 billion in share repurchases via open market transactions during the quarter. Approximately 1.8 million shares were repurchased, with the decrease in outstanding shares benefiting third quarter results by $0.12 per diluted share.

"As of February 28, 2025, $2.6 billion remained available for repurchases under the company's 2024 stock repurchase authorisation. Cash on hand was $5.1 billion."

Outlook
FedEx revised its fiscal 2025 revenue and is now expecting revenue to be flat to slightly down year over year, compared to the prior forecast of approximately flat. Capital spending is likely to be $4.9 billion compared to the prior forecast of $5.2 billion, "with a priority on investments in network optimisation and efficiency improvement, including fleet and facility modernisation and automation."

John Dietrich, Executive Vice President and Chief Financial Officer, FedEx says: "Our team continues to make strong progress on reducing our cost to serve and improving our operational performance–specifically at Federal Express - supporting operating income and earnings growth. 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. Despite this uncertainty, I'm confident we are well positioned to execute on our transformation initiatives and create stockholder value."