- Executives at FedEx, BMW, UBS and others are describing bleak macroeconomic conditions, which they say are weighing on business.
- The head of UBS says it was “one of the worst first-quarter environments in recent history,” while FedEx cites slowing international conditions and weaker global trade growth trends.
- Fitch Ratings also “aggressively” cut its 2019 global forecast this week. But the firm’s economics team stopped short of calling a global recession.
Corporate giants doing business abroad are painting a dreary picture of the world’s economy.
With an ongoing trade war between the U.S. and China, Brexit uncertainty weighing on Europe and the U.K., and new weakness out of Japan, some business leaders say it’s harder than ever to rake in profits.
This week, top executives at FedEx, BMW, UBS and others described bleak global business conditions while discussing quarterly results. Fitch Ratings also “aggressively” cut its forecast for the year.
The head of UBS was among the latest to blame the world’s backdrop for weaker-than-expected results. CEO Ermotti told a conference in London on Wednesday that it “one of the worst first-quarter environments in recent history,” Reuters reported. The Swiss bank slashed another $300 million from 2019 costs after revenue at its investment bank plunged. Investment banking conditions are among the toughest seen in years, especially outside the U.S., he said.
Ermotti’s remarks echo the sentiment from FedEx a day earlier. The multinational package delivery service reported sluggish international revenue on Tuesday as a result of tough exchange rates and ongoing 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,” Chief Financial Officer Alan B. Graf Jr. said in FedEx’s quarterly earnings report.
BMW is another with a less-than-rosy outlook. The German automaker said it expected pretax profit to fall by more than 10 percent in 2019, and its CFO said global conditions make it hard to provide a clear forecast.
“Depending on how conditions develop, our guidance may be subject to additional risks; in particular, the risk of a no-deal Brexit and ongoing developments in international trade policy,” CFO Nicolas Peter said in BMW’s quarterly earnings report Wednesday.
Samsung also joined in on Wednesday. The electronics company is forecasting a tough 2019 due to slowing economic growth, global trade tensions and softer demand for memory chips from data center companies, the firm’s co-chief executive said Wednesday.
“We are expecting many difficulties this year such as slowing growth in major economies and risks over global trade conflicts,” Samsung Co-Chief Executive Kinam Kim said.
It’s not just these big names — all companies in the S&P that generate more than half of their sales overseas are expected to see an earnings decline of 11.2 percent in the first quarter of 2019, according to FactSet.