UPS's shares fell 3 percent to $99.50 in
premarket trading after the company also reported a
bigger-than-expected decline in second-quarter profit.
UPS faced criticism last Christmas when a surge in online
shopping caught the company off guard, leading to huge delays
that frustrated customers.
The company said on Tuesday it would invest $175 million to beef
up its capacity and technology to ensure timely deliveries
during the peak shopping season beginning around Thanksgiving.
"... We are making investments in new capabilities and network
capacity to ensure we meet customer expectations," Chief
Financial Officer Kurt Kuehn said.
The Atlanta-based company said it expects full-year adjusted
earnings of $4.90-$5.00 per share. The company said in April it
expected earnings to come in at the lower end of its previous
forecast of $5.05-$5.30 per share.
UPS's net income fell to $454 million, or 49 cents per share in
the second quarter ended June 30, from $1.07 billion, or $1.13
per share, a year earlier.
Net income included a charge of $665 million for post-retirement
liabilities for some union employees.
Excluding the charge, the company earned $1.21 per share,
falling short of the average analyst estimate $1.25 per share.
Total operating expenses rose 15 percent to $13.5 billion as the
company bought additional capacity at a premium from local
service partners in Europe to address growth in shipments.
Global package shipments rose 7.2 percent in the quarter, driven
by online shopping in the United States and strong international
Total revenue rose 6 percent to $14.27 billion. Analysts on
average had expected $14.11 billion, according to Thomson
UPS's shares have fallen 2.3 percent since the beginning of the
year, trailing the broader Dow Jones U.S. Delivery Services
Index, which has fallen 0.5 percent.
(Reporting by Sweta Singh in Bangalore; Editing by Saumyadeb
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