By Rashika Singh
(Reuters) - Shares of FedEx climbed 5% in premarket trading on Friday, as investors cheered the parcel delivery major's quarterly profit and revenue beat against a backdrop of tariff-related uncertainty and the end of the "de minimis" exemption on low-value shipments.
FedEx's aggressive cost-cutting measures, including parking planes, closing facilities and merging some of its units, helped to protect profits. It has a $1 billion cost-saving plan for this fiscal year ending in May
2026.
Its performance was also driven by a 5% jump in domestic average daily volumes, while its operating margin, a closely watched metric, increased to 6% from 5.2%, which signaled that U.S. consumer demand was resilient.
"FedEx's solid first quarter and issuance of a FY26 guide was a positive surprise for a company that has been battered by a wide array of headwinds," said J.P. Morgan analysts.
Shares of rival United Parcel Service were up more than 1%.
FedEx reported a rise in adjusted profit per share to $3.83 from $3.60 a year earlier, surprising Wall Street analysts, who expected a fall in earnings due to the end of "de minimis" exemptions, which allowed shipments valued under $800 to enter the U.S. duty-free.
The company said global tariffs, including the end of the de minimis exemption for China and Hong Kong, cut first-quarter revenue by $150 million, a hit expected to recur each quarter this year. Combined with other pressures, trade policies represent a $1 billion headwind for FY26, Chief Customer Officer Brie Carere said.
While international export volumes fell 3%, overall average daily volume rose 4% and revenue per package increased 2%.
FedEx trades at 11.83 times its projected 12-month forward earnings, compared with UPS's 12.04. But both companies' stocks are trailing the broader market this year amid softening industrial demand and customers favoring cheaper ground shipping.
(Reporting by Rashika Singh in Bengaluru; Editing by Leroy Leo)
