FedEx Chairman and CEO Frederick Smith said Tuesday that most of the issues facing the company are the result of politicians around the world.
“I’ll just conclude by saying most of the issues that we’re dealing with today are induced by bad political choices,” Smith said Tuesday. “I mean, making a bad decision about a new tax, creating a tremendously difficult situation with Brexit, the immigration crisis in Germany, the mercantilism and state-owned enterprise initiatives in China, the tariffs that the United States put in unilaterally. So you just go down the list, and they’re all things that have created macroeconomic slowdowns.”
The chief executive’s comments came as FedEx reduced its 2019 earnings guidance and reported weakness in its international business. The logistics company lowered its full year 2019 earnings guidance to a range of $15.50 to $16.60 per share, down from $17.20 to $17.80 per share. Analysts expected $17.33 per share.
The company’s stock sank more than 7 percent in premarket trading Wednesday, set to add to a nearly 30-percent plunge over the past six months.
Among Smith’s global concerns were political turbulence between United Kingdom and the European Union as well as a growing trade dispute between the U.S. and China. Washington has slapped tariffs on billions of dollars worth of Chinese exports over the past 12 months in an effort to force China to address alleged theft of intellectual property and other economic policies. Beijing has responded with similar retaliatory tariffs.
To soften the effects of the weakness in its international segment, FedEx also announced Tuesday plans to cut costs. The company said in a release that it will introduce a voluntary buyout program, limit hiring, reduce international network capacity at FedEx Express and reduce discretionary spending.
Though FedEx said the U.S. economy remains solid, it announced a pre-tax cash charge for a voluntary buyout of U.S. employees, which is expected to total $450 million to $575 million.
The company reported second-quarter results the beat analyst expectations on both the top and bottom lines. FedEx reported earnings of $4.03 a share while analysts expected $3.94; it said it generated revenues of $17.8 billion.