Home » 3PL/4PL, Breaking News » UPS misses 2Q target, lowers outlook

United Parcel Service (UPS) posted second-quarter earnings of US$1.12 billion this year, up 2.2 percent from $1.09 billion for the same period in 2011 but below estimates, and said it was cutting its full-year outlook amid expansive economic uncertainty.

“Increasing uncertainty in the United States, continuing weakness in Asia exports and the debt crisis in Europe are impacting projections of economic expansion,” said Scott Davis, UPS chairman and CEO.

The U.S.-based logistics giant’s consolidated revenue rose slightly to $13.35 billion for the period from $13.19 billion year-over-year.

U.S. domestic revenue increased 4.1 percent over the prior-year period, driven by a 3.5 percent gain in package volume mainly from large e-commerce customers shipping low-weight residential packages.

Non-U.S. revenue, however, fell 4.1 percent to $3 billion from the same period a year ago, under pressure from weaker global economies and reductions in exports from Asia. Currency fluctuations also had a negative impact, the Atlanta-based company, the world’s biggest package delivery service, said.

The supply chain and freight segment posted $202 million in profit, a 3.6 percent increase year-on-year despite revenue slipping 1.6 percent to $2.2 billion from $2.3 billion due to slowing international air freight demand and lower pricing.

Forwarding continued to experience pressure on pricing, especially out of Asia, as excess capacity in the marketplace continued.

The distribution business experienced revenue growth driven by healthcare and e-commerce customers. At UPS freight, revenue was flat as lower tonnage was offset by higher yields.

“As we look toward the second half of the year, customers are more concerned as greater uncertainty exists. Additionally, economic growth expectations have come down,” said Kurt Kuehn, UPS’s chief financial officer.

“Consequently, we are reducing our guidance for 2012 diluted earnings per share to a range of $4.50 to $4.70, an increase of 3 percent to 8 percent over 2011 adjusted results.”

 

Photo: Ack Ook

 

 

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