The huge cost of ensuring timely deliveries cost UPS during the holidays and the shipping company is now cutting its outlook for the year.
Shares plunged nearly 10 percent in premarket trading Friday.
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The Atlanta company hired more workers and boosted capacity at its facilities during the busy holiday season to avoid a repeat of 2013, when shippers struggled with a deluge of orders.
UPS Inc. now expects 2014 earnings of $4.75 per share, down from its previous forecast of between $4.90 and $5 per share. Industry analysts had been looking for earnings of $4.96 per share, according to FactSet. For the fourth quarter, UPS expects earnings of $1.25 per share, well below the $1.47 per share analysts had projected.
Shares of FedEx Corp. are down more than 2 percent.