UPS says slowing economy may weigh on first quarter
United Parcel Service Inc., said it may not meet its first-quarter earnings target as U.S. economic growth slows.
Domestic shipments at UPS have dropped for six straight weeks, Chief Financial Officer Kurt Kuehn said today at an investor presentation in New York. Air deliveries have fallen faster than ground shipments. The declines make UPS’s per-share profit goal of 94 cents to 98 cents “difficult to achieve,” Kuehn said. He reaffirmed full-year guidance of USD 4.30 to USD 4.50.
The economic outlook for this year is “uncertain at best,’ Chief Executive Officer Scott Davis told investors. Lower interest rates and tax rebates that are part of a federal economic stimulus package may help reinvigorate demand, he said.
“I’m not ready to proclaim the quarter lost, and I’m not ready to proclaim the economy lost,” Davis said.
Higher fuel costs, job losses and falling home values have dimmed growth prospects for the economy. It will expand 1.4 percent for all of 2008, the weakest since the last recession in 2001, based on the median estimate of 62 economists polled by Bloomberg from March 3 to March 10.
UPS will focus on expanding overseas sales to overcome slowing U.S. demand, Chief Operating Officer David Abney said.
The company is adding operations in 10 cities in China and buying seven Boeing Co. 747-400 wide-body freight airplanes, Abney said. He said India’s export volume jumped more than 25 percent last year, while European exports rose more than 10 percent.
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