UPS third-quarter profit drops on slowing global trade

ATLANTA, Tue Oct 23, 2012 – United Parcel Service Inc. reported lower quarterly profit on Tuesday, citing slowing global trade, and said there was “some uncertainty” about the strength of the coming holiday season.

The world’s largest package delivery company, which has adjusted its network to cope with slowing shipments from Asia and increased demand for cheaper shipping options, reported higher profit in its international segment.

“Our results were achieved in an environment of slowing global trade and changing market dynamics,” CEO Scott Davis said in a statement.

UPS said earnings declined to $469 million or 48 cents share, in the third quarter, from $1.07 billion, or $1.09 a share, a year earlier.

Adjusted earnings were $1.06 per share, matching analysts’ estimates, compared with $1.09 a year ago.

Revenue totaled $13.07 billion, down from $13.17 billion a year ago. Analysts expected $13.3 billion, on average, according to Thomson Reuters I/B/E/S.

“While there is some uncertainty around the magnitude of the holiday shopping season, we are confident in UPS’s ability to deliver,” CFO Kurt Kuehn said in the statement.

UPS forecast 2012 adjusted earnings between $4.55 and $4.65 per share, which would be 5 percent to 7 percent above the 2011 figure. Analysts expect $4.56 a share, according to Thomson Reuters I/B/E/S.

TNT Express not expecting bid from FedEx-source

NEW YORK – Dutch delivery firm TNT Express is not expecting U.S. rival FedEx to trump a 4.9 billion euros ($6.5 billion) takeover bid from United Parcel Services, a source close to TNT said on Thursday.

TNT last week rejected a 9 euros per share cash offer from UPS, the world’s largest package delivery company, but is still in talks with its U.S. suitor.

TNT’s shares jumped to an all-time high of 10.24 euros this week partly on hopes that FedEx, which has flirted with the idea of buying TNT for years, might trigger a bidding war.

“The last discussion we had with them (FedEx) didn’t give us the impression that they were ready to make a move”, the source said, adding he had sounded out FedEx’s intentions very recently.

While FedEx sees strategic value in combining with TNT, it feels the price has become too expensive to do a deal at this point, another source close to the situation said.

The sources asked not to be identified because they were not authorized to speak with the media.

FedEx and TNT declined to comment.

Some analysts said FedEx could be better off scooping up assets that competition regulators might require UPS to sell if it succeeds in winning over its Dutch target.

Sources close to the talks between UPS and TNT said a combined firm would need to make significant asset sales in Europe – the Netherlands, Britain and Germany in particular – to win regulatory approval.

“You could see some assets that are displaced or some market share opportunities that come from the deal as well that could benefit FedEx,” said Benjamin Hartford, senior research associate at Robert W. Baird.