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April 24, 2014 11:30 AM, EDT
UPS Reports Lower 1Q, Citing Bad Weather, Higher Expenses
Tim Boyle/Bloomberg News

UPS Inc. reported lower first-quarter income from a year ago, citing severe weather and higher expenses.

The parcel delivery company’s net income declined to $911 million, or 98 cents a share, from $1.04 billion, or $1.08, a year ago.

Revenue rose 2.6% to $13.8 billion and operating expenses rose 3.5% to $12.3 billion.

(Separately, the Teamsters union said the package division contract covering more than 235,000 workers at UPS was being put into effect on April 25. Ratification of the full five-year deal with a $3.90 per-hour wage increase was delayed nine months by votes on side agreements.)

“Much of the U.S. economy was negatively affected by the severe weather conditions in the first quarter,” which resulted in lower operating results, Chairman and CEO Scott Davis said in a statement.

The UPS supply chain and freight unit’s operating profit rose 3.5% to $148 million, led by gains in its forwarding and distribution units.

Less-than-truckload unit UPS Freight’s revenue rose slightly on a 3.1% increase in LTL revenue per hundredweight, although tonnage and operating profit were lower, also due to severe winter weather.

Domestic package operating profit slipped 14.6% to $927 million. Revenue rose 2.6% to $8.5 billion, and daily volume improved 4.2%, led by UPS SurePost and UPS Second Day Air.

International package operating profit growth was 24% to $438 million. The prior-year period reflected a $39 million charge due to its attempted acquisition of TNT. International segment revenue rose 5% to $3.13 billion.

UPS is “encouraged by the positive trends in our business and expects the remainder of the year to perform as we originally guided,” Chief Financial Officer Kurt Kuehn said in a statement.

But Kuehn added that “due to the challenging start” of the year, the company is forecasting its full-year earnings per share to be $5.05 to $5.30, at the low end of its forecast range.

UPS is ranked No. 1 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.