By Angela Chen
United Parcel Service, Inc. warned of disappointing
fourth-quarter and full-year results, as higher-than-expected
seasonal expenses and currency headwinds dragged down earnings.
Chief Executive David Abney called the fourth-quarter results
"disappointing" and said the company plans to reduce operating
costs and implement new pricing strategies.
For the fourth quarter, the Atlanta-based shipping giant expects
earnings, excluding special items, of $1.25 a share, well below the
$1.47 that analysts polled by Thomson Reuters had predicted.
For the full year, earnings are expected to be $3.28 a share, or
$4.75 excluding special items.
Earlier, the company had predicted full-year profit of $4.90 to
$5 a share.
After a disastrous 2013 holiday season, in which millions of
packages were delivered late, UPS added extra capacity to
accommodate the spike in package volume on the two peak days: Cyber
Monday and December 22. However, demand was less than expected on
other days. This resulted in a decline in productivity, increased
contract carrier rates and costs associated with overtime and
training hours contributed to the excess cost.
The ongoing West Coast port dispute, which has affected
shipments for multiple retailers, also caused problems due to
volume fluctuations.
International operating profit was also below expectations,
mostly due to unfavorable currency rates.
For the current year, the company expects earnings growth to be
less than its previously announced target of 9% to 13%, due to
increased pension expense and currency
Write to Angela Chen at angela.chen@dowjones.com
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