UPS shares fall on outlook

Source: Supply Chain Digital

Date :10/04/2008 04:32:20

UPS shares fell three percent Wednesday a day after the world's largest shipping company cut its first-quarter earnings forecast.

Shares fell $2.27, or 3.1 percent, to $71.04 in morning trading Wednesday after UPS, also known as United Parcel Service Inc. lowered its first-quarter earnings expectations to 86 or 87 cents per share, after the market closed Tuesday.

The Atlanta-based company previously anticipated range of 94 to 98 cents a share.

Lower results

UPS said the cut was because higher fuel costs, a weakening U.S. economy and reduced domestic package volume.

"The U.S. economy has continued to weaken, causing a reduction in domestic package volume and a shift away from premium products," UPS said. "Significantly increased fuel costs in the quarter also contributed to the lower-than-expected results."

Outlook

UPS has said the first three weeks of January saw strong volume growth, but that was later followed by six weeks of contraction. It suggested Tuesday that the negative trends continued into March.

The company plans to release its first-quarter results April 23. It will discuss its outlook for the year then.

At the investor conference, chief executive Scott Davis said the company still considers its domestic market to be important to its future. But he said that the company can't rely on U.S. package volume growth alone. International growth will become more important in the future, he said.

April 10, 2008