United Parcel Service reports 56% drop in third-quarter profit
Shipping giant United Parcel Service Inc. cut its forecast for 2012 after posting plummeting third-quarter earnings and “uncertainty” about the upcoming holiday season.
UPS reported a net profit of $469 million, or 48 cents a share, sharply down 56% from $1.07 billion, or $1.09 a share, in the same period a year ago. Sales also slid nearly 1% to $13.1 billion.
Company executives said the so-called fiscal cliff looming at year’s end which will prompt spending cuts and tax hikes unless Congress comes up with a compromise, throws more uncertainty into an already fragile economy.
“The lack of clear direction on future tax and spending policy...will continue to slow business investment,” said Chief Executive Scott Davis on a call with analysts.
That could spell trouble for a company considered to be a bellwether of the global economy since it handles so many business transactions.
UPS said it expects to ship more than 500 million packages during the holiday season between Thanksgiving and Christmas. It plans to release more seasonal hiring plans soon.
Chief rival FedEx said this week that it will hire 20,000 seasonal employees to work on holiday shipping that is expected to jump 13% from last year, bolstered by online shoppers opting to skip the malls and buy gifts from home. It expects to ship some 280 million packages during the season.
One bright spot for UPS: Asian exports grew for the first time in several quarters, bolstered by several gadget launches such as the iPhone 5.
Follow Shan Li on Twitter @ShanLi
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