(UPS) - Get Report

missed analysts' estimates for the fourth quarter as earnings fell 22%, and the parcel shipper on Tuesday offered a glum outlook for the remainder of 2009.

Excluding items, the world's largest package-delivery company said it earned $829 million, or 83 cents a share, in the final quarter of 2008. Analysts surveyed by Thomson Reuters had estimated 85 cents. A year earlier, UPS earned $1.13 billion, or $1.07 a share. Revenue was $12.7 billion, down 5%, and short of the estimated $13.2 billion.

UPS earned 25 cents a share including items, principally a $575 million noncash impairment charge related to the freight business.

Mad About Options: UPS on the Ups

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"The severe decline in economic activity around the world resulted in sharply lower package and freight volumes for UPS," said CEO Scott Davis in a prepared statement.

Looking ahead, because of limited visibility, the company offered guidance for the first quarter only, forecasting per-share earnings of 52 cents to 68 cents. Analysts had estimated 65 cents.

"The year will undoubtedly be one of the most difficult in UPS's history," said CFO Kurt Kuehn. "Since economists do not expect any meaningful recovery until 2010, earnings in 2009 will suffer. Lower volume levels and reductions in package weight will put further pressure on margins. We anticipate the first quarter will be weak, with slight improvements later in the year as initiatives take hold."

In order to adjust to the downturn, UPS has consolidated operating districts, reduced flights, eliminated some package handling operations, frozen management salaries and suspended its 401(k) match.

During the quarter, average daily package volume was 17.7 million units, down 3.7%. A decline in fuel costs "was more than offset by the effects of economic deceleration around the world," UPS said. Domestically, volume fell 4.4%, and growth in revenue per item was constrained by a lower average weight per package and a continuing shift from premium products.

Internationally, export volume increased 1.6%, but revenue and revenue per piece fell 8%, primarily due to a shift away from premium products, general economic conditions and a stronger dollar. Meanwhile, operating margin in the supply chain and freight division fell by 23.9%, revenue dropped 6.5%, and the adjusted profit margin slid 35%, largely reflecting declines in less-than-truckload hauling.

Shares of UPS closed Monday at $42.42 and weren't trading in the premarket.