The Top 5 Companies Blaming Trade War for Performance

With the ongoing trade war, companies are still citing its impact as reason for poor performance and outlooks, including the following companies.

PPG Industries (PPG)

The paint and coatings supplier may have beaten second quarter EPS estimates, but it fell short of revenue targets when it reported last week.  In fact, according to Chairman and CEO, Michael McGarry, he expects “global economic activity to remain sluggish in the third quarter,” citing “regional and country trade disputes for slower demand.  

“I don’t think the trends we’re seeing right now are going to continue but the single biggest factor in this is the trade war… People have money in their pocket in China and people are employed – it’s [just] a lack of consumer confidence,” said McGarry on the company’s Q2 earnings conference call, as quoted by ICIS News.  “The fact of the matter is that for major purchases, they’re sitting on the sidelines to see how this all turns out.”

Goldman Sachs Group (GS)

Goldman Sachs partially blamed falling revenues in its institutional client services and underwriting business on trade war concerns, too.  “Geopolitical events caused significant shift in risk appetite,” Chairman and Chief Executive David Solomon said, as quoted by MarketWatch. “Fears of expanding trade wars drove concerns that new tariffs on China and Mexico would erode the prospect for continued growth.”

Nike Inc. (NKE)

Nike CFO Andrew Campion cited a stronger dollar, driven by “uncertainty around Brexit and U.S.-China trade” as reason for missing earnings forecasts.  While it did beat with revenue of $10.18 billion from $9.79 billion year over year, net income of $989 million, or 62 cents a share fell short of the $1.14 billion post year over year.

Analysts were looking for 66 cents on revenue of $10.16 billion.  

“Amid foreign exchange volatility, our double-digit currency-neutral revenue growth and expanding [return on invested capital] showcase Nike’s unrivaled ability to create extraordinary value for consumers and shareholders over the long term,” Chief Financial Officer Andy Campion said, as quoted by MarketWatch.

FedEx Corporation (FDX)

FDX posted a nearly $2 billion loss the other day, with CEO Fred Smith attributing weaker international revenue on “the slowdown in global trade.”  “Global trade disputes and low global growth rates create significant uncertainty for the Express business, leading us to be cautious in projecting full-year 2020 earnings for this segment,” he said, as quoted by MarketWatch.

Morgan Stanley (MS)

Even Morgan Stanley’s CFO Jonathan Pruzen noted, “trade discussions” as a reason why Chinese M&A activity has been slow.

In conclusion, only time will tell when the trade war will end.

At the moment, neither side seems to be in a big rush to put an end to this crippling situation.

In fact, while the U.S. and China have restarted trade talks, a comprehensive deal is still a ways off, if one happens at all.  All after China added another member to its negotiating team – Commerce Minister Zhong Shan who is seen as a hardliner.

“The U.S. side has provoked economic and trade frictions against us and violated the principles of the WTO. It is typical of unilateralism and protectionism,” Zhong told the People’s Daily, as quoted by CNBC. “We have to uphold our warrior spirit in firmly defending national and people’s interests in defending the multilateral trading system.”  

In short, China may not be in a rush to reach a major deal that addresses the concerns of the U.S.  In fact, China may be waiting to see what the results of the 2020 election bring.