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FedEx Freight Unit Projects 10% Profit Growth After Spinoff
Outlook Shared Ahead of Expected June 1 Spinoff Date
FedEx Corp.’s freight unit will see average profit growth of 10% to 12% over the next few years after it’s spun off from the core parcel-shipping business.
The company also said it expects to see up to 6% in average revenue growth and more than $1 billion in free cash flow in its medium-term outlook.
The Memphis-based courier provided the first financial outlook for the independent freight business April 8 as it held FedEx Freight’s inaugural investor day ahead of the expected June 1 spinoff date.
FedEx has said it’s separating the freight and parcel operations to better focus on each business.
As an independent, publicly traded company, FedEx Freight will be the largest player of its kind by sales in North America, and industry experts are wary of the effect it could have on the rest of the sector.
FedEx Freight will likely enter into a soft demand environment as the industry remains in a yearslong downturn, prolonged by tariffs and now beset with soaring diesel prices.
“We do not expect any major surprises” until the spin-off is complete, Brian Ossenbeck, an analyst at JP Morgan, wrote in a note April 7. But the ramifications of FedEx Freight’s entry into the market are uncertain for the industry, he wrote.
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 3 on the TT Top 50 list of the largest global freight carriers. FedEx Logistics ranks No. 43 on the TT Top 100 logistics companies list.
