FedEx Freight has issued an optimistic earnings outlook for the remainder of 2026 as it begins life as an independent publicly traded company, despite reporting a sharp fall in quarterly profit driven by spin-off costs, weaker shipment volumes and higher labour expenses.
The less-than-truckload (LTL) carrier, which completed its separation from FedEx Corp. on 1 June and now trades independently, expects revenue to grow between 4% and 6% during the seven-month transition period ending 31 December 2026.
The company also forecast operating income of between $475 million and $515 million over the period, while adjusted operating income is projected to reach between $605 million and $645 million. Adjusted earnings per share are expected to range from $2.40 to $2.60, excluding costs associated with the spin-off.
The positive guidance comes after FedEx Freight reported significantly weaker financial results for the fourth quarter ended 31 May. Operating income fell 66.9% year-on-year to $158 million, while adjusted operating income declined 23.9% to $363 million.
Operating margin narrowed sharply to 6.6% from 20.8% a year earlier, reflecting planned separation expenses, lower shipment volumes, the absence of a one-off gain from a property sale recorded in the previous year, and higher wage costs.
Despite the decline in profitability, quarterly revenue increased 4.8% to $2.4 billion, supported by higher fuel surcharges and increased shipment weights. Average daily shipments declined 5.9%, although revenue per shipment rose 11.5%, while revenue per hundredweight increased by 8.2%.
For the full financial year, revenue slipped 1.1% to $8.8 billion. Operating income declined 58.6% to $616 million, while adjusted operating income fell 25.6% to approximately $1.1 billion. Operating margin for the year contracted to 7.0%, compared with 16.7% in the previous financial year.
Chief Executive John Smith said the company is entering its next phase with a strategy centred on profitable growth and service differentiation.
Chief Financial Officer Marshall Witt said the company’s outlook reflects confidence in FedEx Freight’s network scale, disciplined cost management and ability to generate strong cash flow as an independent business.
FedEx Freight also announced that it has changed its financial year-end from 31 May to 31 December, effective from 1 June 2026.
The company noted that its financial outlook assumes there will be no further deterioration in economic conditions, geopolitical developments or trade-related disruptions during the remainder of the year.
