UPS has lowered its expectations for revenue and operating profit for the second quarter of 2013 and for the full year of 2013. Earnings per share are now expected to be $1.13 in the second quarter.
The downward revision was driven by overcapacity in the global air freight market, increasing customer preference for lower-yield shipping solutions and a slowing U.S. industrial economy, according to the logistics company. Furthermore, UPS said it experienced some slowing in package volume growth as a result of labor negotiations.
“We expect the second quarter market trends to persist and UPS is adapting to meet these conditions,” said Kurt Kuehn, UPS CFO, in a written statement. “Despite downward revisions to economic forecasts for the second half of the year, we anticipate solid profit growth. However, we are reducing guidance for 2013 adjusted diluted EPS to a range of $4.65 to $4.85, a 3 to 7 percent increase over last year.”
The company will release its second quarter results on July 23.
According to Stifel Transportation & Logistics Research, excess capacity in air freight has more positive implications for the stocks of freight forwarders — such as Expeditors International of Washington, UTi Worldwide, Panalpina and Keuhne & Nagel — who could take advantage of the lower buy rates to improve gross profit margins.