* Q1 earnings per share $0.98 vs $1.03 yr ago
* Q1 costs up 4 percent to $12.27 bln
* Sees 2014 earnings per share at lower end of $5.05-$5.30
(Adds charge related to labor contract, closing share price)
By Sweta Singh
April 24 United Parcel Service Inc, the
world's biggest courier company, reported a 12 percent fall in
quarterly profit due to increased overtime and transport costs
related to a colder-than-usual winter in the United States.
The company warned on Thursday that full-year earnings were
likely to come in at the lower end of its earlier forecast,
citing the "challenging" start to 2014.
UPS also said it expected to record a pre-tax charge of
about $1.05 billion in the current quarter as a result of
changes to health and welfare plans for employees under a newly
ratified labor contract. (link.reuters.com/kup78v)
UPS joins a growing list of companies, including closest
rival FedEx Corp, that have blamed the harsh winter for
weak results and a subdued outlook for 2014.
FedEx reported weak third-quarter results in March and cut
its fiscal-year profit forecast, highlighting the impact that
the brutal winter had on the shipping industry.
"The intensity of this year's winter storm season produced
challenging conditions. We saw business-to-business shipments
slow as manufacturers, distributors and retailers closed shop,"
Chief Executive Scott Davis said in on a call.
UPS, known for its brown delivery trucks, faced severe
disruptions to its network as temperatures across a vast area of
the United States ran 6-10 degrees Fahrenheit (3.3-5.5 degrees
Celsius) below normal for more than 2 months.
"Clearly, UPS results in the US reflect both the lost
revenue and the additional costs associated with these storms,"
Total operating expenses rose 4 percent to $12.27 billion,
UPS said in a statement on Thursday.
Costs related to the weather reduced operating profit by
about $200 million. Operating profit from U.S. domestic package
fell 15 percent to $927 million.
Total revenue rose 2.6 percent to $13.78 billion in the
The company's net income fell to $911 million, or 98 cents
per share, in the first quarter ended March 31, from $1.03
billion, or $1.08 per share, a year earlier.
UPS is also investing in technology to avoid a repeat of
last Christmas when a surge in online shopping caught the
company off guard and led to huge delays, frustrating customers
who wanted their packages delivered on time.
The company had increased investments by $500 million to
boost capacity, Chief Financial Officer Kurt Kuehn had told
Reuters in an interview in January.
UPS had forecast 2014 earnings of $5.05-$5.30 per share in
January. Analysts on average were expecting $5.18 per share,
according to Thomson Reuters I/B/E/S.
Shares of the Atlanta-based company closed down 0.6 percent
at $98.64 on the New York Stock Exchange. FedEx shares were also
UPS shares have fallen 6 percent so far this year, in line
with the broader Dow Jones U.S. Delivery Services Index
(Additional reporting by Ankit Ajmera in Bangalore; Editing by
Maju Samuel and Saumyadeb Chakrabarty)