DOW JONES NEWSWIRES
United Parcel Service Inc.'s (UPS) second-quarter income fell
49% on continued weak demand. The shipping company also projected
third-quarter earnings below analysts' views.
UPS said it sees 45 cents to 55 cents per share for the third
quarter. Analysts surveyed by Thomson Reuters expected 59 cents.
The warning is the latest for the company, which like virtually
every industry linked to freight movement have seen steep traffic
declines.
Shares fell 1.6% premarket to $51.48.
Chairman and Chief Executive Scott Davis provided a
much-looked-for outlook on volume, saying declines in the domestic
and international business appear to be stabilizing but volumes
will likely remain "significantly" below last year's levels.
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 has said a trend toward lighter package weights, which
reduces per-package revenue, will likely continue as consumers
attempt to cut costs. Rival FedEx warned last week it was bracing
for soft demand into next year.
UPS posted income of $445 million, or 44 cents a share, down
from $873 million, or 85 cents a share, a year earlier. The latest
quarter included 5 cents in currency and other charges. In April,
the company projected earnings of 45 cents to 55 cents per share,
below analysts' estimates at the time.
Revenue decreased 17% to $10.83 billion. Analysts most recently
expected $11.02 billion.
Operating margin fell to 8.3% from 11.2% while average daily
volume slid 4.6%, in line with the company's estimates. Average
revenue per package fell 11%.
U.S. package revenue fell 12% as the unit's profits slid 47%.
Daily volume slid 4.6%.
In the international packages division, revenue dropped 24% as
average daily volume fell 5.7% and profits declined 29%.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com