United Parcel Service (NYSE: UPS) reported a decline in earnings for the first quarter. The results also missed market expectations and the freight firm’s stock dropped early Thursday. The company reaffirmed its full-year 2019 earnings guidance.United Parcel Service reports flat revenues for Q1

First-quarter earnings, excluding one-time items, fell to $1.39 per share from $1.55 per share in the corresponding period of last year. Analysts were looking for a slower decline. Reported profit dropped to $1.11 billion or $1.28 per share from $1.35 billion or $1.55 per share last year.

The company said profitability was negatively impacted by the adverse weather conditions in North America in the early months of the year.

At $17.16 billion, revenues were broadly in line with the first quarter of 2018 but missed Wall Street’s prediction. A 2% increase in US Domestic Package revenues was offset by declines in International Package and Supply Chain & Freight.

The top-line, meanwhile, benefitted from gains in average daily volume, mainly an 8% increase in US daily air volume amid broad-based growth across all product categories.

“Transformation is creating a firm foundation for performance well into the future. Our strategies and initiatives are driving additional network efficiency and flexibility, and we remain confident in achieving our targets for the year,” said CFO Richard Peretz.

The management reaffirmed its adjusted earnings guidance for fiscal 2019 in the range of $7.45 per share to $7.75 per share. It currently expects adjusted free cash flow to be between $3.5 and $4 billion this year, with potential additional upside from the working capital initiatives. The forecast for effective tax rate is 23-24%.

Also see: United Parcel Service Q4 2018 Earnings Conference Call Transcript

The company is on track to open about 30% of this year’s planned capacity in the second quarter, while no facilities were launched in the corresponding period of last year. The capacity addition will result in additional costs.

Last month, rival cargo transporter FedEx (FDX) reported a double-digit fall in earnings, despite a 3% increase in revenues to $17 billion. The results were hurt by lower parcel volumes at the FedEx Express service.

UPS shares rose 18% since the beginning of the year. The stock, which is currently trading at the levels seen a year ago, lost about 3% in premarket trading Thursday after closing the previous session slightly higher.

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