DOW JONES NEWSWIRES 
 

United Parcel Service Inc.'s (UPS) second-quarter income fell 49% on continued weak demand. The shipping company also projected third-quarter earnings below analysts' views.

UPS said it sees 45 cents to 55 cents per share for the third quarter. Analysts surveyed by Thomson Reuters expected 59 cents. The warning is the latest for the company, which like virtually every industry linked to freight movement have seen steep traffic declines.

Shares fell 1.6% premarket to $51.48.

Chairman and Chief Executive Scott Davis provided a much-looked-for outlook on volume, saying declines in the domestic and international business appear to be stabilizing but volumes will likely remain "significantly" below last year's levels.

As a diversified transportation company that moves everything from documents to building materials, UPS, along with rival FedEx Corp. (FDX), is considered a barometer for the state of the U.S. economy.

UPS has said a trend toward lighter package weights, which reduces per-package revenue, will likely continue as consumers attempt to cut costs. Rival FedEx warned last week it was bracing for soft demand into next year.

UPS posted income of $445 million, or 44 cents a share, down from $873 million, or 85 cents a share, a year earlier. The latest quarter included 5 cents in currency and other charges. In April, the company projected earnings of 45 cents to 55 cents per share, below analysts' estimates at the time.

Revenue decreased 17% to $10.83 billion. Analysts most recently expected $11.02 billion.

Operating margin fell to 8.3% from 11.2% while average daily volume slid 4.6%, in line with the company's estimates. Average revenue per package fell 11%.

U.S. package revenue fell 12% as the unit's profits slid 47%. Daily volume slid 4.6%.

In the international packages division, revenue dropped 24% as average daily volume fell 5.7% and profits declined 29%.

-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353; kerry.benn@dowjones.com