FedEx said last week third-quarter profit fell from a year earlier as the U.S. economy grew at a weaker pace than expected. The package delivery company, considered a bellweather of the economy, also lowered its guidance for the fourth quarter, fueling concern among investors.
Adding to the headwinds are rising oil prices, which rose above $64 a barrel Wednesday. Smith said higher oil may mean a “slight lag” in business, but the company is able to pass it along in fuel surcharges.
“The main thing to us about high fuel prices over time is what it does to the macro economy and economic demand overall,” he said. “The economy is not as robust now as it was at the end of last summer, housing is in a correction, we certainly are in the midst of an inventory draw-down. … We continue to see growth, just not as robust growth as we saw a year ago.”
Meanwhile, the company continues to focus on global expansion in the form of additional acquisitions and partnerships, especially in China and India. FedEx will launch its domestic express service in China on May 28.
“We’re optimistic about the fundamental forces driving our businesses,” Smith said.