At UPS, shipping volumes slump along with the global economy

Some companies' results say as much about the health of the world economy as they do about the businesses themselves. With huge industrial, financial and energy operations, General Electric (GE) is one. As the biggest maker of construction and mining equipment, Caterpillar (CAT) is another. And shipping giant United Parcel Service (UPS), which this morning said that first quarter profit fell more than analysts expected, is another.

UPS said its U.S. shipping volume fell 4.3 percent in the first three months of this year, suggesting that the economy hasn't yet begun to revive. In the first quarter, the company booked a profit of $517 million, or 52 cents a share, excluding one-time items, on revenue of $10.9 billion. That's a 43 percent decline from a year ago, when the company earned $906 million.

Analysts had been expecting a 56-cents-a-share profit. Including a write-down on the company's cargo jets, UPS earned $401 million, or 40 cents a share, it said.

Looking for an economic turnaround this year? It doesn't sound like UPS is. Kurt Kuehn, the company's chief financial officer, downplayed the possibility in a statement accompanying its results.

"Economic indicators tell us recovery in the U.S. might begin late this year, but more likely not until 2010," Kuehn said. "So we expect the second quarter will be another difficult one."

He backed up that sentiment with a second-quarter profit forecast of 45 cents to 55 cents a share, much lower than the 66 cents a share analysts expected, according to Bloomberg TV.

For a company that's seen its revenue grow along with the global economy, it was a rare quarter of contraction. In fact, it was just the second quarter in 10 years that UPS has posted a drop in sales. Forward-looking investors will likely be looking for a resurgence in sales at UPS as one possible sign of the recession's end.
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