Financial Report Preview | Can Peak Season Demand and Cost Reduction Support FedEx Corporation (FDX.US) Profit Beyond Expectations?

FedEx Corporation (FDX.US) will release its second quarter earnings report for the 2026 fiscal year after the market closes on December 18th. Wall Street analysts expect the adjusted earnings per share to be $4.09 and revenue to be $22.8 billion. In the past two quarters, FedEx Corporation's revenue and earnings have exceeded market expectations. Previously, FedEx Corporation management stated that they anticipate a 4% to 6% year-over-year growth in revenue for the 2026 fiscal year. The unadjusted earnings per share are expected to be between $14.20 and $16.00. The full year adjusted earnings per share are projected to be between $17.20 and $19.0. The company expects to incur a $1 billion loss this year due to trade disruptions caused by tariffs (including increased clearance costs and decreased freight volumes, especially in the US-China trade volume). Strong Holiday Season Demand The strong demand expected from the holiday shopping season is anticipated to boost FedEx Corporation's performance in the second fiscal quarter. Management has indicated that they anticipate the peak season performance to remain moderately strong. At the Baird Global Industrial Conference, the company's CFO John Diez said that the upcoming quarterly earnings per share are likely to exceed last year's $4.05. Cost Reduction and Efficiency Improvement The uncertainty related to tariffs and the ongoing high inflation have been dampening consumer confidence and growth expectations. As freight volumes and price trends in the post-pandemic era have not yet returned to normal, FedEx Corporation's performance continues to decline. In the second quarter of the 2023 fiscal year, FedEx Corporation announced the DRIVE plan, a comprehensive project aimed at improving its long-term profitability. The upcoming quarterly performance may also benefit from cost-cutting benefits from the DRIVE plan. Management's current priority is to enhance customer experience and improve cost efficiency, highlighting the efforts FedEx Corporation is making to adapt to the evolving industry demands. These cost-cutting measures include reducing flight frequencies, grounding some aircraft, and layoffs. It is expected that these cost-cutting measures, especially in the areas of ground transportation costs and production efficiency, will support profit margins in the second quarter. Deepening Partnership with Amazon.com, Inc. The market is eagerly anticipating the latest updates from management regarding the multi-year partnership agreement signed earlier this year between FedEx Corporation and Amazon.com, Inc. Under the agreement, FedEx Corporation is responsible for delivering some large parcels for Amazon.com, Inc. Just recently, their competitor United Parcel Service (UPS.US) decided to reduce their business volume in cooperation with Amazon.com, Inc.