Sandy Springs-based shipping giant UPS said bad weather cut into its profits in the first quarter, with net income declining about 12 percent year-over-year.
The bad weather took a roughly $200 million bite out of operating profit, according to UPS. The company had “significant network disruptions” on more than half of the operating days during the quarter, causing it to lose revenue as some businesses closed shop and rack up additional costs. Overtime, snow removal and other costs increased.
“It has been a challenging time and our operations people in the U.S. faced clearly extraordinary conditions and really, storm after storm,” said UPS chief financial officer Kurt Kuehn said during an investor conference call Thursday morning.
UPS reported net income of $911 million in the first quarter, down from about $1 billion a year earlier. Its per-share earnings amounted to 98 cents per diluted share, down from $1.08 a year ago.
Meanwhile, the company’s revenue in the quarter increased 2.6 percent to $13.8 billion, compared with $13.4 billion a year ago. International business improved in the quarter for UPS, with strong growth in Europe.
Separately, UPS said it has been meeting with its largest customers over the past couple of months to to plan for this year’s holiday season and address the problems that arose during the peak shipping period over the holidays in December 2013. Many customers’ shipments were delivered late as UPS got overwhelmed with last-minute online orders.
Yet to be determined is how that might affect prices for consumers shipping gifts over the holidays, particularly for late purchases.
Meanwhile, executives said they are awaiting final word from the Teamsters union and expect a newly-finalized agreement labor contract with the union will improve their service and profitability while giving workers wage and benefit increases.
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