UPS Sees Q4 Earnings Below Street, Cuts FY13 Outlook - Update

(RTTNews) - Package delivery giant United Parcel Service Inc. (UPS), Friday provided a weak outlook for the fourth quarter and slashed its expectations for 2013, citing a compressed holiday season, higher expenses and inclement weather conditions in December.

Following the announcement, UPS shares are currently trading down about 2 percent on the New York Stock Exchange.

In a statement, UPS said that the compressed peak season saw a record level of online shopping, marked by a surge in last-minute orders, forcing the company to deploy more equipment and temporary staff, which jacked up expenses.

UPS earlier warned that the late Thanksgiving will create a shorter peak season and lead to operational challenges.

For the fourth quarter, Atlanta, Georgia-based UPS expects earnings of $1.25 per share. On average, 28 analysts polled by Thomson Reuters currently expect earnings of $1.43 per share. Analysts' estimates typically exclude special items.

For fiscal year 2013, UPS now estimate adjusted earnings of $4.57 per share, from a prior range of $4.65 to $4.85 per share. Analysts currently expect earnings of $4.75 per share for the quarter.

On a GAAP basis, UPS expects 2013 earnings of $4.61 per share.

Despite the weak guidance, UPS and other parcel companies are hoping to generally benefit from robust growth in global online sales, a cheap option for consumers, even as the overall economic situation remains tepid and retailers and other sectors find the going tough.

On December 23 alone, UPS delivered more than 31 million packages - the most ever and 13 percent over the prior-year peak day.

The company said it is confident of its 2014 outlook, with earnings per share to grow in line with its long term targets of 10 percent to 15 percent, compared with 2013 adjusted results.

UPS stock is trading at $98.58, down $1.91 or 1.90%, on a volume of over 4 million shares.