UPS profit tops Street view, sees challenges ahead

UPS (UPS.NY) known for its brown delivery trucks, said on 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 Corp , 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 .

(Reporting by Scott Malone, editing by Gerald E. McCormick and Matthew Lewis)