FedEx Chief Blames Politicians in Washington and Trump for A Slowing Economy
Updated: Dec 28, 2018
His comments came after a 12% drop in the company's stock price.
A 12 % Drop in FedEx stock, after its recent quarterly report, caused the CEO of the Logistics giant, Fred Smith to blame President Trump, along with other politicians for a "slowing economy". A gloomy forecast caused the biggest selloff of the company's stock since the financial crisis of 2008.
Smith said on a conference call late Tuesday that "U.S. trade tariffs, China’s “mercantilism,” and the U.K.’s negotiations to leave the European Union are all weighing on trade and economic growth". This caused the company to reduce its profit forecast for fiscal 2019, reduce international delivery and reduce employee count.
On Tuesday, FedEx dropped its 2019 earnings guidance to $15.50 to $16.60 per share. Previously, the company forecasted $17.20 to $17.80 a share.
The company is planning to offer $450 million to $575 million on buyouts for U.S employees. This effort to reduce employee count comes after the firm announced just this year $3.2 billion in wage increases, bonuses, domestic investments, and pension funding.
“Most of the issues that we’re dealing with today are induced by bad political choices,” said Smith, a longtime Republican supporter who on earnings calls rarely misses an opportunity to champion free trade.
Favorable tax policies and a Republican-controlled government caused Smith to hope for a more favorable operating environment in 2018 and beyond. But The ongoing trade war with China, a $200 billion tariffs on steel among other factors, caused the company to adjust its earning forecast going forward.
"Global trade has slowed in recent months and leading indicators point to ongoing deceleration in global trade near-term," said Alan Graf, FedEx executive vice president and chief financial officer, on Tuesday.