United Parcel Service Inc (UPS.N) on Tuesday reported a slightly lower quarterly profit, eroded by higher costs than expected during a disappointing peak holiday season.
The world’s largest package delivery company had warned in late January that its profit would come in below its forecast and market expectations. The Atlanta-based company had put in place equipment and workers for an anticipated surge in holiday packages that failed to materialize.
As a result of the poor quarter, UPS said it could raise prices ahead of this year’s peak season.
This was a second consecutive challenging peak season for UPS. In 2013, the company was caught off-guard by a late rush of online packages that left an estimated 1.3 million parcels stranded on Christmas Eve.
UPS spent $500 million last year on network improvements and worked closely with retail customers to prevent a repeat of what happened late in 2013, but the rising popularity of e-commerce made forecasting package volumes a moving target.
“As we move into 2015, we will address this disparity with both cost and revenue actions,” Chief Executive David Abney said of the fourth-quarter cost overrun. “We will take actions necessary to improve profitability by increasing operational efficiency and adjusting price where appropriate.”
UPS said it expected full-year 2015 earnings per share in a range $5.05 to $5.30. Analysts expect $5.15 a share this year.
UPS reported net profit for the fourth quarter of $1.15 billion, down nearly 2 percent from $1.17 billion a year earlier.
Earnings per share of $1.25 was unchanged from a year earlier and met the expectation of analysts.
On a GAAP basis, the company reported adjusted earnings per share of 49 cents thanks to pension-related charges.
In light premarket trading, UPS shares were down 0.6 percent at $99.50.
REUTERS
