(By Balaseshan) United Parcel Service Inc. (NYSE:UPS) reported lower than expected quarterly results due to weaker economic conditions. Further, the package delivery company cut its 2012 earnings outlook, sending its shares down 3.99% in premarket.
Earnings for the second quarter were $1.12 billion or $1.15 per share, up from $1.09 billion or $1.09 per share last year. Revenue rose 1.2% to $13.35 billion.
Analysts, on average, had expected earnings of $1.17 per share on revenue of $13.70 billion for the second quarter.
U.S. Domestic revenue increased 4.1% to $8.06 billion, driven by a 3.5% gain in package volume. Volume grew across all products as ground rose 3%, UPS Next Day Air increased 5% and deferred air climbed 8.6%. The majority of the improvement was driven by large e-commerce customers shipping low-weight residential packages.
International revenue fell 4% to $3.01 billion, as the segment remains under pressure due to weaker global economies and reductions in exports from Asia. Currency fluctuations also had a negative impact.
Export volume increased 0.8% over last year. European growth was mostly offset by double-digit declines in exports from Asia to the U.S. and Europe. Non-U.S. Domestic volume, down 3.2%, reflected weaker economic conditions and continued yield improvement initiatives.
Revenue from supply chain & freight declined 1.6% to $2.28 billion, due to slowing International Air Freight demand and lower pricing. Forwarding continues to experience pressure on pricing, especially out of Asia, as excess capacity in the marketplace continues.
Looking ahead into the fiscal 2012, the company lowered its earnings guidance to range of $4.50 to $4.70 per share from previous forecast of $4.75 to $5.00 per share, while Street predicts $4.83 per share.
As looking toward the second half of the year, the company said increasing uncertainty in the United States, continuing weakness in Asia exports and the debt crisis in Europe are impacting projections of economic expansion.
UPS ended Monday's regular session at $77.95. The stock has been trading between $60.74 and $81.79 for the past 52 weeks.