UPS Profit Falls but Exceeds Forecasts

United Parcel Service, the world's largest package-delivery company, reported a 9.9 percent drop in profit that was milder than Wall Street had feared, though the company said it experienced a significant slowdown as the quarter came to an end.

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UPS , known for its brown delivery trucks, said Thursday it expects profit per share for the year to come in "toward the lower end" of the $3.50 to $3.70 forecast it set in July.

"We anticipate a challenging environment for a number of quarters going forward," said Kurt Kuehn, the Atlanta-based company's chief financial officer, in a statement.

"We believe the U.S. consumer will be very conservative with spending this year."

Third-quarter net income came to $970 million, or 96 cents a diluted share, compared with $1.08 billion, or $1.02 a share, a year earlier.

Wall Street analysts on average expected 89 cents a share, according to Reuters Estimates.

Revenue was up 7.4 percent.

UPS said it has cut its 2008 capital expenditure budget by $200 million to $2.8 billion and expects to reduce 2009 capital spending as well.

Like its main rival FedEx , which last month reported a 22 percent drop in quarterly profit, UPS has been hit this year by high fuel prices and a slowing economy.

Both companies are considered bellwethers, on the premise that consumers and businesses ship more packages in good times.

So far this year, UPS shares are down about 34 percent, a steeper drop than the 21 percent slide of the Dow Jones transportation index.

UPS Fears Fewer Goodies in Santa's Sleigh

UPS expects the volume of packages it carries in the United States to drop 4 percent in the fourth quarter as anxious consumers buy fewer holiday gifts, a top executive said Thursday.

"With consumer confidence approaching new lows, we're concerned that Santa's sleigh will be lighter this year," said Kurt Kuehn, chief financial officer, on a conference call with analysts.

"It will be several more quarters before any turnaround becomes evident."

Given its expectations that the world economy will remain weak, the Atlanta-based company anticipates cutting jobs to reduce costs next year, Kuehn said.

As more consumers shop online, UPS plays a growing role in the holiday shopping season.

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