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Freight profits drop
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July 19, 2001: 9:07 a.m. ET
UPS, Union Pacific beat forecasts as profits slip; UPS cuts 3Q guidance
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NEW YORK (CNNfn) - The slowing U.S. economy hit second-quarter profits at United Parcel Service, the world's largest transportation company, and Union Pacific Corp., the nation's largest railroad, and UPS warned that it will miss third-quarter forecasts due to continued weakness.
UPS (UPS: Research, Estimates) beat lowered earnings forecasts as it posted net income of $630 million, or 55 cents a share, in the period, down from $695 million, or 60 cents a share, a year earlier. Analysts surveyed by earnings tracker First Call forecast that earnings per share would drop to 54 cents after two warnings from the company.
Revenue increased 4 percent to $7.6 billion from $7.3 billion a year earlier, helped by gains in international freight and non-freight sales. Its ratio of operating expenses to revenue, the key measure of a freight company's financial performance, worsened to 85.9 percent for its package operations from 84.1 percent a year earlier.
UPS said it now expects third-quarter earnings per share of between 52 and 55 cents, below the 57 cent First Call forecast and the 60 cents it earned in the year-ago period.
Strong coal shipments helped Union Pacific (UNP: Research, Estimates) nearly match year-ago profits as it blew past forecasts.
The western U.S. railroad reported second-quarter net income of $243 million, or 95 cents a share, down slightly from the $244 million, or 96 cents a share, a year earlier. First Call's forecast called for EPS to fall to 90 cents a share.
Revenue, including its Overnite Transportation trucking unit, edged up 1 percent to just under $3.0 billion from $2.97 billion a year earlier. Its overall operating ratio worsened to 83.5 percent from 81.2 percent a year earlier.
Shares of UPS lost 25 cents to $58.03 Wednesday, while shares of Union Pacific slipped 5 cents to $57.65. 
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UPS
Union Pacific Corp.
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