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UPS Cuts Outlook on Lower Volume and Fuel Costs

United Parcel Service, the world's largest shipping carrier, cut its first-quarter profit guidance Tuesday, citing lower volume and higher fuel costs.

UPS
Chris Gardner
UPS

The company said it now expects earnings per share of 86 cents or 87 cents. Previously, the company said it expected first quarter profit between 94 cents and 98 cents per share.

Analysts polled by Thomson Financial were expecting earnings of 93 cents per share.

UPS shares fell about 4 percent in electronic after-hours trading. During regular trading, shares fell 47 cents to close at $73.31.

The company said lower volume trends from February continued through March, making it impossible to meet its prior guidance.

Atlanta-based UPS said a shift away from premium products and higher fuel costs also contributed to the guidance cut.

The move comes after the company warned last month it may not meet first-quarter earnings guidance and plans to focus more on growth opportunities overseas because of the uncertain U.S. economy.

Chief Executive Scott Davis warned at an investors conference last month that UPS still considers its domestic market important to its future, but said the company can't rely on U.S. package volume growth alone.

Other company officials said China, India and Europe provide good growth opportunities.

Last month, UPS rival FedEx reported a 6 percent drop in third-quarter earnings and said a slow economy and high fuel prices are expected to continue cutting into profits. The Memphis-based shipper predicted fourth-quarter earnings would be lower than a year ago and its earnings growth would be limited in the next fiscal year.