UPS quarterly profit plunges as shipping slides

/ Source: The Associated Press

UPS Inc., the world's largest shipping carrier, said Thursday that second-quarter profit plunged 49 percent to $445 million as sales slipped 16.7 percent amid the economic downturn.

The Atlanta-based company's profit for the April-June quarter was equivalent to 44 cents a share, compared to a year-ago profit of $873 million, or 85 cents a share.

Adjusted earnings were 49 cents a share.

Revenue fell to $10.83 billion from $13.00 billion a year earlier.

Analysts surveyed by Thomson Reuters, who generally exclude one-time items, expected earnings of 49 cents a share on revenue of $11.02 billion.

UPS said it expects third-quarter earnings in a range of 45 cents to 55 cents, below the 59 cents analysts forecast.

"The economic environment continues to be difficult," Kurt Kuehn, UPS' chief financial officer, said in a statement ahead of an investor conference call. "Declines in both our domestic and international businesses appear to be stabilizing but volumes will remain significantly below last year's levels."

Average daily volume in UPS' U.S. domestic package segment declined 4.6 percent in the second quarter. Air volume was flat while ground volume declined 5.4 percent.

UPS said average daily international export volume decreased 7.3 percent.

For the first half of the year, UPS reported a profit of $846 million, or 84 cents a share, compared to a profit of $1.78 billion, or $1.72 a share, a year earlier. Six-month revenue fell to $21.77 billion, compared to $25.68 billion a year earlier.

UPS, also know as United Parcel Service, along with rival FedEx Corp. are seen by economists and analysts as bellwethers of the global economy, since they deal with such basic indicators of company health as orders and product shipments.

UPS has seen weaker package volume due to cutbacks by businesses amid the U.S. recession.

The company has been cutting costs and jobs. An executive has said UPS cut 10,000 domestic jobs in the first quarter through attrition and part-time employees leaving and not being replaced.

UPS previously said economic indicators suggest recovery in the U.S. might begin late this year, but more likely not until 2010. Kuehn said Thursday that questions remain about when business activity will begin to strengthen.