United Parcel Service Inc. (UPS) declared its fiscal third quarter results today. Net income was $549 million or 55 cents per share, compared to a net income of $970 million or 96 cents in the prior-year quarter. However, EPS of 55 cents was better than the Zacks Consensus Estimate of 52 cents. Revenues stood at $11.2 billion, down 14.9% year over year. This was primarily due to the lower volume of parcel shipment as a result of the ongoing economic downturn.

Operating profit was $929 million, down 43% year over year. Operating margin was 8.3% compared to 12.4% in the year-ago quarter. Consolidated volume of packages in the same quarter was 927 million, down 2.4% year-over-year. UPS ended the third quarter with $2.8 billion of cash and short-term investment. During the first nine months of fiscal 2009, the company generated $3.4 billion of free cash flow, paid $1.3 billion in dividend, invested $1.2 billion in capital expenditures, and repurchased 7.8 million of its own common share for a total consideration of $396 million.

U.S. Domestic Package Segment

Quarterly revenues were $6.9 billion, down 12.4% year over year. Operating profit was $514 million, down 54.1% year over year. Operating margin was 7.5% compared to 14.2% in the year-ago quarter. During the quarter, the company’s total volume of packages was 799 million, down 3.6% year over year. Average daily volume declined 5.1% year over year.

International Package Segment

Quarterly revenues amounted to $2.4 billion, down 18% year over year. Operating profit was $313 million, down 18.9% year over year. Operating margin was 12.9% compared to 13.1% in the year-ago quarter. Average daily volume increased 4% year over year.

Supply Chain and Freight Segment

Quarterly revenues were $1.9 billion, down 19.8% year over year. Operating profit was $102 million, down 20.9% year over year. Operating margin was 5.5% compared to 5.6% in the year-ago quarter.

Future Financial Outlook

Management expects fourth-quarter EPS to be in the range of 58 cents to 65 cents.

Zacks Investment Research
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