UPS shares at 4 1/2-year low after profit warning
United Parcel Service Inc shares fell 4.6 percent on Tuesday to their lowest point since late 2003.
UPS’s announcement came just a week after main rival Memphis-based FedEx Corp posted a quarterly loss and gave a weak profit outlook for its fiscal 2009.
The warning, which weighed on U.S. stocks, was the latest sign that corporate America could no longer brush off surging energy prices. Crude oil prices have roughly doubled over the past year.
UPS shares dropped USD 3.06 to USD 63.20.
The Dow Jones transportation index .DJT, which also includes airlines and railroads, was down 1.3 percent.
Like other major companies in the U.S. transport sector, UPS passes on higher fuel costs to customers. But as BB&T Capital Markets analyst John Barnes wrote in a note to clients, “fuel prices may have reached a tipping point at which many shippers are simply unwilling to pay the higher fuel surcharges.
Late Monday, UPS said it expected to earn between 83 cents and 88 cents per share in the second quarter, down from a previous range of 97 cents to USD 1.04.
In a statement, the company said U.S. package volume had been lower than expected, while demand for higher-priced air delivery services had seen a particular drop.
UPS also said that the “anemic U.S. economy is negatively impacting volume into the United States, affecting results for the international segment.”
In recent quarters, strong international package demand has helped both UPS and FedEx offset lower growth in their domestic services as U.S. economic growth has slowed.
United Parcel Service Inc shares fell 4.6 percent on Tuesday to their lowest point since late 2003.
UPS’s announcement came just a week after main rival Memphis-based FedEx Corp posted a quarterly loss and gave a weak profit outlook for its fiscal 2009.
The warning, which weighed on U.S. stocks, was the latest sign that corporate America could no longer brush off surging energy prices. Crude oil prices have roughly doubled over the past year.
UPS shares dropped USD 3.06 to USD 63.20.
The Dow Jones transportation index .DJT, which also includes airlines and railroads, was down 1.3 percent.
Like other major companies in the U.S. transport sector, UPS passes on higher fuel costs to customers. But as BB&T Capital Markets analyst John Barnes wrote in a note to clients, “fuel prices may have reached a tipping point at which many shippers are simply unwilling to pay the higher fuel surcharges.
Late Monday, UPS said it expected to earn between 83 cents and 88 cents per share in the second quarter, down from a previous range of 97 cents to USD 1.04.
In a statement, the company said U.S. package volume had been lower than expected, while demand for higher-priced air delivery services had seen a particular drop.
UPS also said that the “anemic U.S. economy is negatively impacting volume into the United States, affecting results for the international segment.”
In recent quarters, strong international package demand has helped both UPS and FedEx offset lower growth in their domestic services as U.S. economic growth has slowed.
