UPS, FedEx eye overseas growth
Currently, about 39 percent of FedEx annual revenue comes from the company's domestic express business. About 25 percent comes from its international express business. The company hasn't publicly released future projections for how much revenue will come from domestic versus international operations.
"When the U.S. economy improves, our domestic business will improve, but even at that, the real growth in the years to come will be in international operations," FedEx spokesman Jesse Bunn said. "The growth will clearly be overseas in countries like India and China where we've made significant investments."
In other industries, beverage giant The Coca-Cola Co. has offset sales softness in the U.S. with strong international results and Delta Air Lines has cut domestic capacity while increasing international capacity.
But analysts who follow UPS and FedEx said the shippers will still need to rely on their home market in years to come.
"Despite UPS' efforts in the last several years to focus away from the maturing U.S. market, (Tuesday's) announcement shows how dependent the company's business is on the U.S. economy," Citigroup analyst John Kartsonas said in a research note Wednesday.
He added, "Without some kind of improvement in industrial production, we don't foresee any considerable progress in business performance and/or margins, while at the same time high fuel prices remain a headwind to growth."
Atlanta-based UPS, also known as United Parcel Service, is now expecting to post first- quarter earnings of 86 cents a share or 87 cents a share, compared with a previously anticipated range of 94 cents a share to 98 cents a share.
Analysts polled by Thomson Financial, on average, were expecting earnings of 93 cents per share.
Previously, UPS said it expects earnings per share to be between $4.30 and $4.50 for the year, but it did not update that Tuesday.
One analyst Wednesday lowered his earnings per share expectations for UPS through 2010.
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