UPS Reduces Profit Forecast on Fuel Costs, Economy

[Pale Blue Dot]

June 23 (Bloomberg) -- United Parcel Service Inc., the world's largest package-delivery company, lowered its second- quarter profit forecast because of rising fuel costs and a slowing U.S. economy.

Earnings will be 83 to 88 cents a share, down from the range of 97 cents to $1.04 projected on April 23, Atlanta-based UPS said today in a statement. The average estimate of 16 analysts surveyed by Bloomberg was 98 cents.

UPS said the ``anemic'' economy is damping demand for air shipments, its most profitable offering, and for U.S.-bound international packages. Jet-fuel costs have jumped 30 percent this quarter, and recouping those expenses with surcharges has a two-month lag time, Chief Financial Officer Kurt Kuehn said.

``The weak U.S. economy, record high fuel costs and shippers trading down -- you combine all these things and it's a tough environment,'' said Craig Hutson, a bond analyst in Chicago at independent research firm Gimme Credit LLC.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avumSU7sV7hs

[snappyturtle]

1. This isn't good. I had daily UPS pick-up in the nineties for seven

years. Every year on February first rates went up....I think it was three percent. Every year I ended up having to absorb some of that increase. I would guess that the fuel surcharges* they will institute in July on air shipments places it on their customers. Greed has marked or pocked our corporations for so long that now they are literally pricing themselves out of the market. UPS worked hard to grow...and grow they did. Too bad they didn't put some of that profit away for a rainy day! Time for UPS to experience some of the tough environment...imho.

*"UPS's fuel surcharges for air shipments will increase to 32.5 percent in early July, up from 28 percent now, according to the carrier's Web site. Kuehn said the second quarter will be 2008's ``most challenging'' because of the run-up in fuel."