UPS sees profits slide by over half in Q1
Express giant UPS has announced that its first-quarter revenues dropped from US$12.68 billion to $10.94 billion in comparison to the same period last year, while profits dropped by 56%.
Although the company is continuing with expansion efforts, particularly its air hub in Shenzhen and the Worldport facility, the current environment has induced it to lower its capital spending for the year by $200 million to just under $2 billion.
The results were also hit by the impairment charges incurred as a result of UPS’ decision to park its 44-strong fleet of DC8 freighters, which cost the company $181 million, with first-quarter profits standing at $718 million.
UPS indicated that the conditions had wiped out any share growth gained by the departure of DHL from the US domestic scene.
"We're pleased that our cost control initiatives are on plan and producing the benefits they were designed to achieve. In fact, we have identified $300 million in additional initiatives to help offset some of the recessionary impacts we're experiencing," said Kurt Kuehn, UPS's chief financial officer.
"Economic indicators tell us recovery in the U.S. might begin late this year, but more likely not until 2010. So we expect the second quarter will be another difficult one. As a result, UPS anticipates earnings per diluted share in a range of $0.45 to $0.55,” added Kuehn.