Updated version 2 - Although FedEx's quarterly profit exceeded expectations, its profit margin declined and the stock price still fell.

Rewrite: Focus on declining profit margin and falling stock price

Reuters, October 28 - FedEx (FDX.N) said on Wednesday that although its core U.S. express business saw a decrease in quarterly operating profit margin, its reported profit still exceeded expectations. The company's stock fell 1.6% in after-hours trading.

The parcel delivery company said the profit margin dropped to 6.6% from 6.8% a year earlier. Driven by improved pricing, volume growth, and cost-saving measures, the company posted a 28% year-on-year profit increase for the July-to-September quarter and now expects full-year profit to surpass market expectations.

The Memphis-based company noted that these positive factors were partially offset by increased costs for additional transportation resources, higher wages and compensation, and changes in U.S. tariff policies.

"We remain committed to rigorous operational management to reduce service costs while focusing on profitable growth," said CEO Raj Subramaniam.

According to data compiled by London Stock Exchange Group (LSEG), FedEx expects adjusted earnings per share in 2026 to be between $18 and $18.60, higher than analysts' expectations of $17.73 per share.

After spinning off its freight-truck business on June 1, the company switched its reporting cycle from a fiscal year starting in the most recent quarter to calendar-year reporting.

A global trade bellwether, FedEx reported third-quarter adjusted earnings per share of $3.74, up from $2.93 in the same period last year. Stock buybacks increased current quarter EPS by 2 cents. According to LSEG data, analysts' average expectation for EPS was $3.36.

As part of a multi-year restructuring plan, FedEx has slashed billions of dollars in costs, is integrating its Ground and Express delivery operations (link), and automating some of its operations.

Additionally, the company has completed the sale of its supply chain subsidiary (link) to focus on its core express business.

With rival UPS (link) UPS.N showing initial success in boosting profits and cutting costs, the streamlined company now faces investor pressure to further enhance profitability and reduce expenses.

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