UPS set to report Q4 earnings
UPS will have some explaining to do when it releases its fourth-quarter earnings Thursday.
The Atlanta-based package delivery giant cut its forecast two weeks ago, citing weather issues and sluggish demand in the last week of the year. The explanation left analysts unconvinced.
SAN FRANCISCO (MarketWatch) – UPS will have some explaining to do when it releases its fourth-quarter earnings Thursday.
“We expect UPS management to admit several planning and execution shortfalls,” Bear Stearns analyst Edward Wolfe said in a research note.
UPS is projected to earn 76 cents a share, up 8 percent from the year-earlier period. Sales are pegged at $9.76 billion, up 9 percent from the same time last year, according to analysts polled by Thomson First Call.
Before it lowered its forecast, the company had targeted a profit in the range of 83 cents to 87 cents a share.
Shares of UPS UPS have slipped over 8 percent since the Jan. 11 announcement that sparked two downgrades.
So what’s gone wrong?
Analysts sense rival FedEx is nipping at the heels of UPS in the ground delivery business. And DHL is looking to take market share as well, undercutting UPS on price.
In addition, UPS might be running into problems rolling out new technology to deliver packages. When completed, the overall is expected to save the company $600 million a year.
Despite the expected profit shortfall for the fourth-quarter, UPS did reaffirm its financial guidance for 2005, a signal that the company plans to recover from its recent hiccup. Its international business remains robust, with projected double-digit volume growth for the quarter ended Dec. 31.
