UPS hits the skids in week 52
UPS lowered its fourth quarter 2004 guidance in response to slow growth of domestic package volume and higher than anticipated operating costs.
Earnings per share are expected to be 75 to 76 cents compared with the company’s previous expected range of 83 to 87 cents per diluted share, not including any tax benefits.
Full-year earnings will increase 19 percent to $2.89 to $2.90 per share, the Atlanta-based logistics company said.
UPS said it experienced an unexpected, “significant” drop in U.S. domestic volume between Christmas and New Year’s Day. The company was on pace for 2.5 percent volume growth until the last week and finished the quarter with an increase of 1.6 percent compared to the same 2003 period.
Domestic ground volume was up 1.5 percent, while Next Day Air rose 4.1 percent. International business continued its double-digit volume growth.
UPS said higher operating costs were the result of severe weather that struck the Ohio Valley during the height of its peak season operations. The same storms caused hundreds of flight delays two days before Christmas, stranding thousands of travelers. Cargo planes were stranded at airports in Ohio, Tennessee, Indiana and Kentucky and delivery trucks were slowed. FedEx and UPS said at the time the delays resulted in some customers not receiving packages in time for Christmas.
The main UPS hub is in Louisville, Ky. FedEx has hubs in Memphis and Indianapolis.
UPS reaffirmed its positive outlook for 2005. The company expects earnings will increase 13 percent to 17 percent in 2005, on top of the nearly 19 percent earnings increase it anticipates for the full year in 2004.