UPS executives have warned that the US economy and the domestic package market may grow only by1%-2% in 2008. The comments follow the company’s Q4, 2007 results which reflected weaker
end-of-year domestic sales but continued strong international growth.In the final three months of 2007, including the vital pre-Christmas peak season, UPS increasedits US domestic daily average package volumes by just 1.4%, in contrast to a 7.1% rise in itsnon-US international volumes. The company described the US economy as “sluggish” and the economicenvironment as “increasingly challenging”. However, US prices remained firm with an overall 2.3%rise.
Discussing the 2008 market outlook in a conference call with investors yesterday, UPS executivessaid they expected the US economy to grow only about 1% – 2% this year. The domestic package marketwould grow at a similar rate, CEO Scott Davis commented. CFO Kurt Kuehn added there was “certainlya risk of a recession”. But the weaker dollar would also support US exports, while Asia-Europetraffic should remain strong, he said.
Analysts responded generally positively to the UPS results and outlook, saying the company waswell-positioned to grow internationally and also to take advantage of problems at DHL Express andlabour issues at FedEx.
