UPS Profit Falls; Cuts 2008 Earnings Forecast
UPS, the world's largest shipping carrier, said Wednesday its profit rose 7.5 percent in the first quarter, though it was affected by the weakening U.S. economy. The company lowered its earnings guidance for the year.
The results reported for the most recent quarter were in line with Wall Street expectations.
The Atlanta-based company said it earned $906 million, or 87 cents a share, in the January-March quarter, compared to a profit of $843 million, or 78 cents a share, in the year-ago period.
Analysts surveyed by Thomson Financial were expecting earnings of 87 cents a share in the quarter.
Revenue in the quarter rose 6.5 percent to $12.68 billion, compared to $11.91 billion recorded a year earlier.
UPS said it benefited from strong gains in its international operations.
But UPS, also known as United Parcel Service, said it doesn't expect the U.S. economy to strengthen in the second quarter. Shares fell $1.20, to $70.70 in premarket trading Wednesday.
As a result, it now expects earnings for the quarter to range between 97 cents and $1.04 a share, compared with $1.04 a share reported for the second quarter of 2007.
The company said it was reducing its earnings expectations for the full year to between $3.90 and $4.20 a share. Previously, UPS said it expected earnings per share to be between $4.30 and $4.50 for the year.
During the first quarter, UPS delivered total consolidated volume of 968 million packages, unchanged from a year ago.
It said its results were affected by a shift from premium products, the timing of the Easter holiday and sharply rising fuel costs.
UPS said the slowing U.S. economy reduced average daily volume in the U.S. by 0.3 percent for the quarter. It saw volume declines in next-day air shipments.
"U.S. economic activity deteriorated more rapidly than expected during the quarter," Chief Executive Scott Davis said in a statement. "While we will be extremely vigilant with respect to costs in this difficult environment, we will not lose our focus on growing the business."