FedEx CEO Says Trade War Like "Mike Tyson Punch" To Company's Bottom Line

Despite reporting earnings that were stronger than the Street had expected (albeit after slashing guidance on more than one occasion and excluding several "one time" expenses), FedEx shares tumbled in after-hours trade last night after the logistics belwether and the company that is arguably the most adversely impacted by the burgeoning trade war warned about the fallout from the trade war and its impact on the company's 2020 bottom line.

CFO Alan Graf warned during the company's post-earnings call Tuesday that "our fiscal 2020 performance is being negatively affected by continued weakness in global trade and industrial production, especially at FedEx Express."

Those comments, combined with lowered guidance on its capex expenditures, weighed on the company's shares after last night's report, though they bounced back on Wednesday and held their gains even after the rest of the market erased this morning's Mnuchin bump (a bump that proved to investors once and for all that using the correct verb tense can make all the difference).

But when it came his turn to speak, FedEx CEO Fred Smith offered one of the most creative, and most memorable, analogies for how the Trump administration's protectionist bent has impacted multinationals that are dependent on growth in trade for their own top-line growth.

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The global economic uncertainty unleashed by President Trump's protectionist policies and Brexit has upended the best-laid plans of many companies, not just FedEx. But when it comes to Smith's company, unless Trump finds a swift resolution with the Chinese, the trade war could have a punishing impact on FedEx's bottom line.

Smith compared the impact of the trade war to a punch to the face from boxer Mike Tyson (presumably, a Tyson in his prime).

"It reminds me a bit about that old adage of Mike Tyson that everybody has got a plan until they get hit in the mouth," Smith said. "So clearly, we’ve been very disappointed over the last few years with the assumptions that we made on the growth in international trade, particularly with the Trump administration."

FedEx  declined to project fiscal 2020 earnings results for its FedEx Express business segment on Tuesday, saying the trade row created "significant uncertainty" for the business unit.

"The United States policy since 1934 with Roosevelt and Secretary of State Cordell Hull was to expand international trade," Smith said. “And now we have a huge dispute where the United States is basically become protectionist defined as, 'I’ll make everything I need in my own borders. I don't need to import things and quite frankly don't particularly need to export them.'"

Though Smith didn't place 100% of the blame on Trump, saying he didn't agree with China's mercantilist inclinations.

"We don’t agree with the Chinese position on trade either – and have been very vocal about that – which is mercantilist," he added.

We imagine this won't be the last time we hear a CEO use a creative analogy to describe how the trade war is impacting their company's bottom line - after all, the headlines are a welcome distraction from the impact of shrinking export growth on earnings guidance.

Speaking of Tyson's infamous knockout punch, here's a compilation of the legendary boxer's "Greatest Hits".