25 Jul 2012

UPS profit outlook cut

12:10 pm on 25 July 2012

UPS has cut its profit outlook for 2012, blaming worsening global economic conditions.

The international parcel delivery company cut its forecast for earnings per share to $US4.50 - $US4.70 from an earlier estimate of $US4.75 - $US5 per share.

The company also reported a 2% rise in net income to $US1.12 billion in the three months ending 30 June from $1.09 billion a year earlier.

Shares fell 4% in early New York trade on the results.

The BBC reports parcel delivery and shipping are often seen as a good indicator of economic activity. Rising revenue is usually a sign firms and households are buying more goods.

Revenue in the United States increased 4.1% to $US8 billion. Increased volumes meant UPS trucks and containers were fuller which improved efficiency and profit margins.

But UPS delivered fewer packages overseas which reduced international revenue by 10% to $3.0 billion in the quarter to the end of June.

Sales from its freight business also dipped slightly to $US2.28 billion from $US2.32 billion a year earlier.

UPS now expects trading in the second half of 2012 to be much tougher than the beginning of the year due to economic downturn in many markets in Asia and Europe.