DOW JONES NEWSWIRES
United Parcel Service Inc.'s (UPS) first-quarter net income fell
56% on an aircraft-related write-down and falling margins as the
shipping company projected second-quarter earnings below analysts'
views.
The company didn't provide a much-anticipated outlook on freight
volume in its press release. As a diversified transportation
company that moves everything from documents to building materials,
UPS, along with rival FedEx Corp. (FDX), is considered a barometer
for the state of the U.S. economy.
UPS expects second-quarter earnings of 45 cents to 55 cents a
share. Analysts polled by Thomson Reuters projected 65 cents.
Chief Financial Officer Kurt Kuehn said an economic recovery
might begin late this year but more likely wouldn't start until
next year. He added the company has found $300 million in
additional cost cuts to help it offset the effects of the
recession.
UPS's shares were down 2.9% at $53.19 in premarket trading.
In recent months, virtually every industry linked to freight
movement, from rails to trucks to ports, has experienced steep
traffic declines.
UPS posted net income of $401 million, or 40 cents a share, down
from $906 million, or 87 cents a share, a year earlier. Excluding
items including the write-down, earnings fell to 52 cents, the low
end of February's forecast.
Revenue fell 14% to $10.94 billion. Analysts polled by Thomson
Reuters most recently expected $11.44 billion.
Operating margin fell to 6.6% from 11.8% while average daily
volume slid 3.9% and average revenue per package fell 6.9% due to
falling fuel surcharges and weight per package.
U.S. package revenue fell 10% as the unit's profits fell 60%.
U.S. next-day air volume fell 0.7% as daily volume fell 4.3%, in
line with the company's expectations. In the international packages
division, revenue dropped 19% as average daily volume fell 1%, and
profits slumped 30%.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com