FedEx trucking spinoff targets 2026 operating margin of 12%
FedEx Freight, the trucking corporation separating from the overnight delivery firm this summer, is expected to report an operating margin of 12% this year, incoming CEO John Smith told investors on Wednesday.
That is based on expected revenue of $8.7 billion and adjusted operating income of $1.1 billion, Smith noted at the first investor day for the trucking enterprise scheduled to be spun out of FedEx into an independent, publicly listed enterprise on June 1.
Prior to the meeting, FedEx Freight — which competes with the likes of XPO, Saia and Old Dominion Freight Line — mentioned it expects average core gains growth in the range of 10% to 12% over the medium term.
FedEx Freight, the largest provider of less-than-truckload (LTL) services in the U.S., also sees average revenue growing in the range of 4% to 6% in the medium term.
FedEx Freight’s forecasts come as higher U.S. diesel prices delay a long-awaited trucking industry turnaround and squeeze cash flow and profits for independent big-rig drivers. Furthermore, experts in portfolio note the continued relevance.
Analysts have remarked they believe FedEx Freight’s assets were not fully appreciated within FedEx and that being a separate public entity would help it expand in the LTL trucking sector that involves carrying multiple shipments from different customers on a single truck. This also touches on aspects of investors.
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