UPS predicts stagnant quarter ahead
Citing the US economic recovery as the wild card in its global business, United Parcel Service projected little improvement in the first quarter of 2003.
The brightest spot for the world’s largest package deliverer remains its non-US business, which has seen operating profits more than double in the fourth quarter to $154m. That compares with a 9.1 per cent fall in operating profits in the US.
“In the United States, the timing of the economic recovery is definitely the biggest unknown,” said Scott Davis, chief financial officer of UPS. “Outside the US, we expect to see continued strong export growth, particularly in Asia and Europe, and an increase in international profitability of 20 per cent or more.”
For the coming quarter, UPS said total package volume would be flat, while earnings would fall in a range at the low end of analysts’ estimates.
As with rival FedEx, the company has been hurt by the slowdown in the US economy and particularly the troubles in the manufacturing and technology sectors. The threat of a Teamsters strike among UPS drivers last year also hurt business, causing many customers to switch to FedEx.
As a result, package volume in the US fell 1.3 per cent in the fourth quarter, though the drop was smaller than in the previous two quarters. The company said the critical holiday season in the quarter began slowly but surged at the end. It delivered about 1m more packages on its peak day than in the 2001 Christmas season.
The company expects first quarter earnings to be between 48 cents and 53 cents a share. Wall Street analysts’ estimates are for 53 cents a share.
