The top executive at United Parcel Service Inc. said Thursday that a U.S. economic recovery may not emerge until 2010, a more pessimistic outlook than many other business leaders have.The company said it suffered "precipitous declines" in volume of its higher- margin next-day delivery products during September. Fourth-quarter volume in the U.S. is expected to be 4% lower.
The freight sector is regarded as a leading indicator of economic activity. Like smaller rival FedEx Corp., UPS has suffered a sharp decline in its domestic package and document business, partly countered by international growth.
"Consensus GDP and [industrial production] growth keep getting lower," Chairman and Chief Executive Scott Davis said on a conference call with analysts.
Davis said the prospects for a U.S. recovery were "being pushed further into 2009," and may not emerge until 2010, with weakness continuing to emerge in international markets. Many European economies are on the "brink of recession," while Asian markets are also slowing.
His comments came as UPS beat analysts' expectations with net income of $970 million, or 96 cents a share, for the third quarter. That compares with $1.08 billion, or $1.02 a share, a year earlier, including $46 million in restructuring charges. Analysts estimated on average earnings of 89 cents a share in the latest quarter.
Shares closed down 8.5% at $46.39 Wednesday and rose 2.8% to $47.70 in pre- market trading.
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