Global slump hurts UPS profit, shares fall

CHICAGO (Reuters) - United Parcel Service Inc reported a lower-than-expected profit and gave an outlook below analysts' views as the global economic downturn has caused fewer packages to be shipped, sending its shares down as much as 7.5 percent.

The U.S. economic bellwether warned that its second-quarter outlook would likely fall below analysts' expectations and said that while the economic recovery could begin as soon as the end of this year, it would more likely come in 2010.

"The results are miserable, but we expected misery," said Edward Jones analyst Dan Ortwerth. "And all bets are off as to when that misery will end."

The world's largest package delivery company reported first-quarter net income of $401 million, or 40 cents a share, compared with $906 million, or 87 cents a share, a year earlier.

Excluding an impairment charge for the early retirement of the company's fleet of DC-8 jets, UPS earned 52 cents per share in the quarter. Analysts on average had expected earnings of 56 cents a share, according to Reuters Estimates.

Atlanta-based UPS said first-quarter revenue fell to $10.94 billion from $12.68 billion. Analysts had expected $11.42 billion.

But Ortwerth said UPS's healthy cash position of $4.3 billion and cash flow of $1.9 billion at the end of the first quarter are strengths he is stressing to his clients.

The decision by UPS to retire its DC-8 fleet was a sign of how robust and flexible the company is, he added.

"This is a very strong company," he said. "And in a storm that's what you want -- a company that's able to ride out the storm."