UPS blames winter weather for drop in 1Q profit
DALLAS (AP) — First-quarter net income at UPS slumped 12 percent as winter storms increased costs for the shipping giant and cut into its revenue.
The company said Thursday that the rough start to the year means that full-year earnings will come in at the low end of its earlier forecasts.
Separately, UPS said that a new contract with the Teamsters union covering 253,000 employees will take effect on Friday. The 5-year deal is retroactive to last August and includes wage and benefit increases and a new base wage of $10 per hour for part-timers, the company said.
About 125,000 full-time and part-time employees who were still on UPS-sponsored health plans will move to three separate multi-employer plans, UPS said in a regulatory filing. UPS said it will make a cash payment of $2.27 billion and transfer $1.2 billion for post-retirement obligations to the multi-employer plans.
UPS said that it expects to take a pretax charge of about $1.047 billion in the second quarter to cover the changes.
United Parcel Service Inc. reported first-quarter net income of $911 million, or 98 cents per share, well short of the $1.08 that Wall Street was expecting and less than the $1.04 billion, or $1.08 per share, it earned a year earlier.
UPS said winter storms reduced operating profit by $200 million as costs rose.
Revenue increased by 2.6 percent to $13.78 billion, but that was still shy of the $13.91 billion that analysts had forecast, according to a FactSet survey.
Average daily shipments in the U.S. rose 4.2 percent, but at the same time, revenue per package fell at home and abroad as customers shifted toward lower-priced services.
UPS said that full-year earnings would be at the low end of its earlier forecast of between $5.05 and $5.30 per share. Analysts expect $5.18 per share.
Shares of UPS Inc. fell 60 cents to close at $98.64. They are down 6 percent so far in 2014.