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UPS profit hit by shorter U.S. holiday shopping season

A bicycle delivery man rides past a UPS truck in New York's Times Square, July 23, 2012. REUTERS/Brendan McDermid
A bicycle delivery man rides past a UPS truck in New York's Times Square, July 23, 2012. REUTERS/Brendan McDermid

(Reuters) - United Parcel Service Inc said its 2013 profit would miss forecasts as a flurry of orders towards the end of a shorter U.S. holiday shopping season and cold weather took a toll on service.

The world's No.1 package delivery company's shares fell as much as 3.5 percent in early morning trading on Friday.

UPS said it delivered more than 31 million packages on December 23 — its highest ever and 13 percent more than the prior-year peak day.

However, the "highest delivery day" occurred six days later than expected and was 7.5 percent greater than planned, UPS said on Friday.

"We think UPS did a poor job forecasting the holiday season," S&P Capital IQ analyst Jim Corridore wrote in a note.

The courier company said on December 25 it was overwhelmed by a high volume of holiday packages, delaying the arrival of Christmas presents around the globe.

Cold weather coupled with six fewer days between Thanksgiving and Christmas pushed Americans to shop more towards the end of the season, when discounting was at its peak.

UPS said the level of online shopping towards the end of December was unprecedented.

Shipment volume and forecasts at UPS, along with rival FedEx Corp , are closely watched by Wall Street and considered an indication of overall economic health because of the vast amount of goods they transport.

UPS has also been hurt by retailers cutting back express shipping. This reduces costs for manufacturers, but hurts courier companies like UPS, which make more money on faster shipping.

The company said on Friday it expects full-year earnings of $4.57 per share, below its previous forecast of $4.65-$4.85.

UPS expects a profit of $1.25 per share for the fourth quarter ended December 30.

Analysts on average expected earnings of $1.43, according to Thomson Reuters I/B/E/S.

The company said it was confident of its 2014 outlook. UPS expects full-year diluted earnings to rise by 10-15 percent, implying a profit of $5.02-$5.26 per share. Analysts were expecting $5.48.

Corridore said he expects the company to be more prepared this year as online shopping continues to grow.

UPS is scheduled to report results on January 30.

(Reporting by Sagarika Jaisinghani in Bangalore; Editing by Joyjeet Das)

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