UPS upbeat over forecast for 2005
UPS yesterday insisted its weak performance in the last three months of 2004 was an isolated blip and forecast “solid” growth this year, driven by surging international business, particularly in China.
However, guidance for first-quarter earnings was at the lower end of analysts’ expectations, deepening concern that the world’s largest package delivery company could be losing ground to rivals FedEx and DHL.
UPS pledged to reduce annual costs by Dollars 200m and launch an initiative to win more business from mid-sized US businesses in response to its disappointing end to last year.
The company warned two weeks ago that its fourth-quarter earnings would fall below expectations because of reduced growth in domestic ground deliveries.
Scott Davis, chief financial officer, yesterday blamed the slowdown on poor planning and bad weather, dismissing the notion that FedEx and DHL were stealing significant market share.
“Although it was a challenging quarter it was just that – one quarter,” he said.
Mr Davis said UPS was interested in making further acquisitions in the logistics and freight-forwarding sectors as it seeks to diversify into a broader range of supply chain services.
The comments fuelled market rumours that UPS is considering a bid for Exel, the UK-based logistics group.
Mr Davis said that despite the domestic slowdown the fourth quarter had been the most profitable in the company’s history, with net earnings up 1.2 per cent at Dollars 866m, or 76 cents a share.
