Citing slowing business trends, UPS cut its profit forecast in a sour sign for both the global shipping giant and the economy.
UPS shares fell 5.8 percent on the news Friday, to $86.12.
Sandy Springs-based UPS said its second quarter profit will amount to $1.13 per share — shy of the $1.20 previously expected by analysts. The reasons UPS gave include two key signs of sluggishness: The U.S. industrial economy is slowing and customers are choosing cheaper shipping methods.
The company also cited “overcapacity” in the global air freight market.
In addition, a recent labor contract deal with the Teamsters union that fell short of full approval is also affecting the company’s business. UPS said it has had slower growth in package volumes due to labor negotiations, which make some customers nervous about possible disruptions.
Last month workers voted to approve a national master contract while rejecting some supplemental agreements and a smaller contract for freight workers. That prompted the Teamsters union and the company to extend the current master contract and supplements.
Meanwhile, the economic slowness is likely to continue, according to UPS chief financial officer Kurt Kuehn.
“We expect the second quarter market trends to persist and UPS is adapting to meet those conditions,” Kuehn said in a written statement. The company said it still expects its profit measured in diluted earnings per share to increase by 3 to 7 percent for 2013 compared with last year.
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