UPS profit down 43%

UPS            RECESSION           LOGISTICS

Singapore – Profits were down at UPS this quarter, despite some signs of economic recovery that helped stabilise previously plummeting volumes.

Net income for the three months ended September 30 fell more than 43% to US$549 million compared to US$970 million in the same quarter last year.

Revenue slipped nearly 15% to US$11.2 billion from US$13.1 billion a year earlier.

Chairman and CEO Scott Davis said he was encouraged by signs of economic recovery but stressed that the sector still has "a long way to go".

It was also focused on cost management, and said it was able to achieve a flat margin in its supply chain and freight business, despite a drop in revenue from US$2.32 billion in the third quarter of 2008 to US$1.86billion this year. Operating profits also fell from US$129 million last year to US$102 million in the corresponding quarter this year.

"UPS is poised for the recovery when it comes," said Kurt Kuehn, UPS's CFO. "We've instituted cost initiatives that will approach US$1.4 billion this year, making UPS more efficient than ever.

"In addition, we will reduce our 2009 capital expenditures to US$1.7 billion, down US$500 million from our initial budget," he said.

The company is hoping for a better fourth quarter, even if analysts are split on whether consumer spending will increase during the holiday season. It expects earnings per diluted share within a range of US$0.58 to US0.65 for the fourth quarter.

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