UPS Inc.’s first-quarter profit plunged as fewer people sent packages and used premium services like next-day air amid the global financial crisis.
The world’s largest shipping carrier also gave a disappointing second-quarter outlook today, and disclosed it shed 10,000 domestic jobs during the first three months of the year.
UPS earnings in the January-March period fell more than 55 percent to $401 million as revenue dropped more than 13 percent, compared to profit of $906 million a year ago.
The results missed Wall Street expectations, and UPS provided an outlook for second-quarter earnings that was below analysts expectations. UPS shares fell.
“Clearly, these are extraordinary times,” Chief Financial Officer Kurt Kuehn told analysts in a conference call.
The first-quarter profit was 40 cents a share, compared to year-ago earnings of 87 cents a share.
Revenue in the quarter was $10.94 billion, versus $12.68 billion a year ago.
Adjusted earnings were 52 cents a share. Analysts polled by Thomson Reuters, on average, expected UPS to earn 56 cents per share on revenue of $11.4 billion for the first quarter. Analysts generally exclude one-time items from their estimates.
Rival FedEx Corp. also has been facing financial headwinds from the weak economy. In March, the Memphis, Tenn.-based company said it would cut more jobs and trim wages again, after reporting its fiscal third-quarter profit tumbled 75 percent on sliding revenue. Earlier this month, FedEx said it would permanently remove 14 jets from service as part of an overall plan to reduce capacity.
Economists and analysts consider FedEx and UPS to be bellwethers of the global economy, since they deal with such basic indicators of company health as orders and product shipments.
For the three months ended March 31, UPS’ consolidated average daily volume totaled 14.5 million packages, a 3.9 percent decline compared to a year ago. Average revenue per piece decreased 6.9 percent, reflecting changes in product mix, declining fuel surcharges and weight per package and the negative impact of currency. (AP)
