UPS Says Slowdown May Crimp 1Q Earnings

UPS Inc. executives told Wall Street analysts and investors the company is poised for long-term growth, but that it may have difficulty achieving its first-quarter earnings guidance due to a slowing economy.

Chairman and Chief Executive Officer Scott Davis said “despite any short-term economic challenges,” UPS has made significant progress in developing its global transportation network, which now handles freight forwarding and less-than-truckload shipping, as well as packages.

Chief Financial Officer Kurt Kuehn said UPS remains on target to achieve the long-term goals that it first revealed in November 2006. From 2005 to 2010, he said, UPS anticipates revenue growth of 6 to 8% per year, per-share earnings growth of 9% to 14% and return on invested capital of 23% to 25%.

After noting that several economic indicators have recently worsened, Kuehn said the U.S. package segment experienced a solid January, but volume declined in February across its entire customer base.

“If these trends continue through March, our earnings guidance for the first quarter will be difficult to achieve,” Kuehn added.

In January, UPS said its first-quarter earnings-per-share would be 94 cents to 98 cents, and between $4.30 and $4.50 for the full year.

UPS is ranked No. 1 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.