Tuesday, March 19, 2019
FedEx just warned the whole globe is slowing
A top executive at FedEx is flagging serious concerns in the global economy.
The multinational package delivery service reported declining international revenue as a result of unfavorable exchange rates and the negative effects of trade battles.
"Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue," Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer, said in statement.
FedEx reported weaker-than-expected third-quarter earnings and revenue after the closing bell on Tuesday, and cut its full-year guidance. Shares fell more than 4 percent in after-hours trading.
Despite a strong U.S. economy, FedEx said its international business weakened during the second quarter, especially in Europe. FedEx Express international was down due primarily to higher growth in lower-yielding services and lower weights per shipment, Graf said.
To compensate for lower revenue, Graf said FedEx began a voluntary employee buyout program and constrained hiring. It is also "limiting discretionary spending" and is reviewing additional actions.
FedEx shares have dropped roughly 27 percent in the past year, lagging the XLI industrial ETF's 1 percent decline.
The U.S. and China remain locked in an ongoing stalemate on trade tariffs. On Tuesday, there were multiple reports about progress on negotiations between the world's two largest economies. According to Bloomberg, some U.S. officials fear that China is reneging on certain trade concessions.