FedEx slashes profit outlook in fresh sign trade war is wounding US corporate giants
- Shares plunge 9.8 per cent in late trading
- FedEx has had several mishaps in China that hurt its brand
Blaming a weakening global economy, FedEx sharply slashed its profit outlook in the latest sign that trade tensions are dragging down US corporate titans.
The forecast sent the courier’s shares tumbling and signalled deepening trouble for FedEx as the US and China battle over tariffs – a stand-off that has also ensnared manufacturing giants such as Caterpillar and Deere. FedEx, which already announced an employee-buyout program in January, said it would pare its cargo-jet fleet to contend with the diminished expectations.
“The global economy continues to soften and we are taking steps to cut capacity,” FedEx chief executive officer Fred Smith said in a conference call to discuss earnings late Tuesday. The slowdown is being “driven by increasing trade tensions and policy uncertainty,” he said.
President Donald Trump’s trade manoeuvres are tormenting Smith, a free-trade advocate and long-time Republican donor who has sounded the alarm quarter after quarter that tariffs would hurt economic growth. Commercial tensions are complicating FedEx’s costly integration of a European acquisition and putting the company under the microscope of the Chinese government. FedEx is also girding for a revenue drag after severing most ties with Amazon.com.
“This global macro weakness couldn’t hit them at a worse time,” said Kevin Sterling, an analyst at Seaport Global Holdings. “They’ve kind of lost their way here for what seems like a year or so. People are becoming more sceptical.”