Page last updated at 13:18 GMT, Thursday, 23 April 2009 14:18 UK

UPS sees profits slump by a half

A UPS delivery man
People are not sending as many parcels during the economic downturn

United Parcel Service (UPS) has announced a 55% drop in profits for the first three months of this year compared with a year ago.

The world's largest package delivery company, which is seen as a strong indicator for the US economy, saw net profits fall to $401m (£275.4m).

Revenue fell by 14% from $12.7bn to $10.9bn as people sent fewer packages during the economic downturn.

The disappointing results were well below analysts' expectations.

'Miserable results'

And the company expects another tough quarter ahead.

"Economic indicators tell us recovery in the United States might begin late this year, but more likely not until 2010. So we expect the second quarter will be another difficult one," said UPS' chief financial officer Kurt Kuehn.

Dan Ortwerth at Edward Jones said "the results are miserable".

However, he said the company had a healthy pot of cash set aside and had a strong cash flow position.

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

The results of UPS are watched keenly because there is a strong correlation between demand for sending packages and the state of the US economy.

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