FedEx sank 12 percent on Wednesday, posting its worst day in more than 10 years, a day after Chairman and CEO Frederick Smith said 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. "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 stock is also on track for its worst month since 1978.
The "new tax" Smith mentioned refers to the Treasury Department's proposed regulations covering a one-time transition tax on unrepatriated foreign earnings, which was enacted as part of President Donald Trump's massive tax cut legislation.
The company said in a government filing that "certain guidance included in these proposed regulations is inconsistent with our interpretation that led to the recognition of a $225 million benefit in 2018. Notwithstanding this inconsistency, we are confident in our interpretation and intend to defend this position through litigation, if necessary."
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.
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.