Shares of FedEx plunged 7 percent in premarket trading Wednesday after the company lowered its full-year outlook and announced it would cut costs because of a slowdown in the global economy.
Policy decisions and global uncertainty have put pressure on trade, hurting the logistics company's expansion of its international business, FedEx Chairman and CEO Frederick Smith said Tuesday.
"And I'll just conclude by saying most of the issues that we're dealing with today are induced by bad political choices, making a bad decision about a new tax, creating tremendously difficult situation with Brexit, the immigration crisis in Germany, the mercantilism and state-owned enterprises in China, the tariffs that the United States put in unilaterally," Smith said during a conference call with analysts.
The decline in the stock Wednesday adds to a 25 percent drop it has seen since the start of the year, bringing its market value to $48.8 billion.
Analysts surveyed by Refinitiv were expecting the logistics company to announce full year earnings of $17.33 per share. Instead, FedEx said it expected to earn between $15.50 and $16.60 per share, down from $17.20 to $17.80 per share.
The company also said it would not be providing its forecasts for revenue growth and operating margin for the year.
Additionally, the company announced plans to slash costs to make up for weakness in its international business. It will implement a voluntary buyout program for U.S. employees and limit hiring. It is also considering buyouts for international employees. FedEx plans to reduce discretionary spending and capacity for its international network.
FedEx otherwise beat analysts' expectations for both earnings and revenue in the second quarter. The company reported earnings of $4.03 per share, topping estimates of $3.94. Wall Street also expected revenue of $17.75 billion, while FedEx reported $17.8 billion in sales for the quarter.
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