UPS is the world's largest package delivery company, so their business results are certainly reflective of economic activity. The company reported first quarter earnings this morning. They met earnings expectations this quarter but lowered guidance for the balance of the year.
The falling dollar is helping their export business, but it's clear from their earnings release and conference call that they see no signs of an economic rebound. Specifically, management commented on how quickly volume fell off in February and the negative impact of rising fuel costs.
Here are a few snippets from the earnings release:
A sharp decline in U.S. economic activity, however, led to a 9.4% drop in diluted earnings per share to $0.87 compared to a prior-year adjusted $0.96.
...consolidated average daily volume remained flat at 15.1 million packages per day.
"U.S. economic activity deteriorated more rapidly than expected during the quarter," said Scott Davis, UPS chairman and CEO.
The slowing U.S. economy not only reduced average daily volume in the U.S. by 0.3% for the quarter but also contributed to a shift away from premium products.Volume declined 3.8% for Next Day Air(R) and 2.9% for Deferred, while increasing 0.3% for Ground.
"We see no signs of economic strengthening in the second quarter," said Kurt Kuehn, UPS's chief financial officer.
Export volume increased approximately 10% in local operating days, which drove a 15.7% revenue increase.
