United Parcel Service Inc., the world’s biggest package delivery company, cut its 2013 earnings forecast, saying a slowing U.S. economy hurt second-quarter profit and revenue.
Adjusted earnings fell to $1.13 a share in the second quarter, marking the first drop in more than three years and missing analysts’ estimate of $1.20, according to data compiled by Bloomberg. Profit for the year will increase as little as 3 percent, Atlanta-based UPS said Friday.
UPS and FedEx Corp., often viewed as economic bellwethers because they ship goods across the world, are working to counter a shift by their customers to less expensive shipping options as domestic growth is projected to slow from 2012. UPS Chief Financial Officer Kurt Kuehn said in the statement he expects market trends to persist.
“The severity of it was more than we were anticipating,” said James Corridore, an analyst at S&P Capital IQ in New York, who rates UPS a buy. “What will be interesting to see is how UPS intends to attack these issues.”
Shares were up 24 percent for the year before Friday’s trading.
UPS forecasts adjusted earnings will rise to $4.65 to $4.85 a share in 2013, down from its earlier prediction of $4.80 to $5.06.
The projected profit growth trails a prediction by FedEx, which is reducing expenses to counteract waning demand for priority shipping. FedEx said last month it sees fiscal full-year earnings rising as much as 13 percent as it parks older planes sooner and cuts capacity in Asia. About 3,600 workers also are leaving under a voluntary buyout program.