UPS Shares Are Getting Crushed After The Company Warns That Its 4th-Quarter Results Will Be Terrible

UPS disclosed on Friday morning that it expects its fourth quarter earnings will widely miss expectations.

In pre-market trade on Friday, UPS shares were down as much as 8%.

UPS said it expects adjusted earnings per share to total $1.25 in the fourth quarter, missing Wall Street's current expectations for earnings of $1.47, with UPS attributing this earnings to "underperformance" from its US domestic segment.

"While package volume and revenue results were in line with expectations, operating profit was negatively impacted by higher than expected peak-related expenses," the company said.

UPS added:

Peak plans were designed to provide high quality service for volume surges. The extra capacity was necessary to process the extreme spike in package volume on Cyber Monday and peak day, December 22. However, demand was less than expected on other days. This resulted in a sub-optimized network during peak season. A decline in productivity, increased contract carrier rates, as well as costs associated with overtime and training hours contributed to the excess cost. In addition, the network was somewhat disrupted by volume fluctuations caused by the West Coast port dispute. In its release, UPS CEO David Abney said, "Clearly, our financial performance during the quarter was disappointing." The company added that an added pension expense of $180 million and currency headwinds - i.e. a strong US dollar - will negatively impact results in 2015, and the company now expects its 2015 EPS will come in below its target of 9%-13% growth. Read UPS' full release here »