By Lisa Bertlin and Abhinav Parmar
(Reuters) – FedEx announced the much-anticipated spinoff of its freight trucking division on Thursday, as it restructures its operations to focus on its core delivery business, sending shares of the parcel delivery giant up after hours. Sends up to 10% in trades. .
Analysts believe the spinoff could unlock up to $20 billion in shareholder value, while clearing the way for FedEx management to zero in on the merger operations of its separate express and ground units. They also say that the FedEx Freight assets were not fully appreciated within FedEx and that spinning off that business as an independent company would provide an opportunity to grow and improve that business.
FedEx Freight is the largest U.S. less-truckload service. is a provider, which involves transporting multiple goods from different customers on one truck; Shipments are then routed through a network of service centers where they are transferred to other trucks with similar destinations. It generated revenue of about $2.2 billion during the second quarter ended Nov. 30.
The rally in FedEx shares came despite the company’s warning that it expects 2025 revenue to be hampered by a stubbornly challenging environment where demand for its fastest and most profitable deliveries remains weak.
Memphis-based FedEx lowered its profit outlook for the full year ending May 2025, calling for an adjusted profit of $19 to $20 per share. In September, FedEx lowered the top end of its full-year adjusted operating income to between $20 and $21 per share, from a previous range of $20 to $22 per share.
FedEx’s second-quarter adjusted profit fell to $0.99 billion, or $4.05 a share, from $1.01 billion, or $3.99 a share, a year earlier. Still, the latest quarter’s results topped analysts’ average call for earnings of $3.90 per share, according to LSEG.
FedEx Freight turned in lower-than-expected revenue and profit during the latest quarter, due to continued weakness in the U.S. industrial sector that includes manufacturing, metals and chemicals. This was mostly offset by ongoing cost-cutting at the company, which is reducing overhead and working to improve efficiency.
FedEx said the express unit’s adjusted results improved during the quarter, helped by cost reductions and more international export volumes. This was partly due to higher wages and lease rates, weaker US package delivery demand and US demand for air transport services on September 29, 2024. was offset by the termination of the Postal Service contract.
FedEx previously warned that the loss of USPS, its largest customer, would create a $500 million headwind in the current fiscal year.
