FedEx Tamps Down 2025 Outlook Despite Digital Transformation Efforts

In some ways, FedEx is a bellwether of global trade and logistics.

After all, global growth, inflation, fuel costs, interest rates, supply chain disruptions and competition are all elements that affect FedEx’s revenue, margins and strategic investments. They also each represent things all businesses need to watch out for.

And as the company’s Thursday (Sept. 19) first-quarter 2025 earnings proved, while the operating backdrop is tough and uncertain, embracing digital innovation to unlock growth through new efficiencies represents a promising way through.

“Despite a challenging quarter, we remain focused on transforming our network, improving our efficiency, lowering our cost-to-serve, and enhancing our ability to adapt with speed to evolving market dynamics,” said Raj Subramaniam, FedEx Corp. president and chief executive officer on Tuesday’s earnings call. “Overall, I remain confident in the value-creation opportunities ahead as we focus on reducing our structural cost, growing revenue profitably and leveraging the insights from our vast collection of data as we continue to build the world’s most flexible, efficient and intelligent network.”

The logistics company’s financial results showed a profit of $790 million, or $3.21 a share, for the most recent quarter; compared with $1.08 billion, or $4.23 a share, during the same quarter last year.

FedEx executives cited a decline in weight per shipment, reduced priority shipments and one fewer operating day as reasons for the decreased results during the quarter, noting that FedEx Freight “continues to execute its long-term strategy of streamlining its network,” having completed the closure of seven small-market facilities during the quarter.

A reduction of structural costs from the company’s DRIVE program initiatives partially offset these factors, FedEx leadership told investors.

Read more: Experts Expect Spinoff as FedEx Considers Future of Freight Unit

While FedEx Freight continues to provide less-than-truckload freight transportation services as a separate subsidiary, on June 1, FedEx Ground and FedEx Services were merged into Federal Express, becoming a single company operating a fully integrated air-ground express network, under the company’s DRIVE transformation program.

As a result, the company reaffirmed its financial forecast for the full-year 2025 of permanent cost reductions from the DRIVE transformation program of $2.2 billion; as well as capital spending of $5.2 billion, with a priority on investments in network optimization and efficiency improvement, including fleet and facility modernization and automation.

“Our revised outlook reflects our continued confidence in the execution of our DRIVE initiatives and the effects of our recent pricing actions, which we expect to help offset weaker-than-expected demand trends,” said John Dietrich, FedEx Corp. executive vice president and chief financial officer.

But FedEx also revised its fiscal 2025 revenue and earnings forecasts downward for its revenue growth rate year over year to a low single-digit percentage, compared to the prior forecast of a low-to-mid single-digit percentage increase.

The company issued downward guidance on earnings per diluted share, now projected at $17.90 to $18.90 before the MTM retirement plans accounting adjustments, compared to the prior forecast of $18.25 to $20.25 per share; and $20 to $21 per share after also excluding costs related to business optimization initiatives, compared to the prior forecast of $20 to $22 per share.

Read more: How Digital Transformation Aligns Supply Chains With Compliance, Sanctions Risk

As executives stressed to investors, digital transformation and consolidation is crucial to the broader effort by FedEx to streamline operations and improve efficiency in response to the softer demand that has impacted the industry at large.

PYMNTS Intelligence revealed in July that concerns over supply chain integrity and macroeconomic conditions highlight how larger external factors also remain on CFOs’ radars.

PYMNTS also analyzed here earlier how businesses in the transportation, shipping and logistics sector are turning to technologies like embedded supply chain finance to enhance resilience, drive efficiency and ultimately transform their operations.

As FedEx navigates through a period of economic uncertainty and shifting market dynamics, the outcome of its digital transformation efforts will likely have significant implications for the company’s future performance and its position within the global logistics sector.

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