UPS Executives: Apparent Air Volume Strength Due To DHL Exit
24 July 2009 - 12:06AM
Dow Jones News
United Parcel Service Inc. (UPS) executives described their
financial outlook as "cautious" Thursday, saying conditions aren't
"getting dramatically worse" but don't seem to be improving quickly
either.
Chief Financial Officer Kurt Kuehn told analysts on a
post-earnings conference call that the package-delivery giant is
seeing some signs of stabilization, and he predicted the overall
third-quarter economic environment will be similar to the second
quarter.
He cited average package weights in particular, noting that UPS
posted a big year-over-year average weight decline in the second
quarter but the trend appears to have flattened out sequentially
from the first quarter.
"We don't see any increase in negative momentum" on package
weights, Kuehn said.
Meanwhile, he called industry pricing "very competitive" but
said it has remained "rational," with customers recognizing that
service still matters.
"As the economy improves, we expect pricing to improve as well,"
he said.
UPS executives said they have yet to see strong evidence either
way regarding the caliber of the back-to-school shipping season,
although they described themselves as "hopeful" that a solid season
will materialize.
On a related note, Kuehn said some apparent second-quarter
strength in UPS's premium next-day-air volume was attributable to
the exit of competitor Deutsche Post AG's (DPW.XE) DHL unit from
the U.S. market.
Volume in the domestic premium air service was off 0.3% in the
second quarter, compared with an overall domestic volume decline of
4.6%.
-By Bob Sechler; Dow Jones Newswires; 512-394-0285;
bob.sechler@dowjones.com