Continued international growth and a turnaround in its supply chain and freight businesscompensated for the impact of the slowing US economy and drove higher profits for UPS in the third
quarter, the company announced today.In the three months ending September 30, 2007, UPS increased its operating profit by 8.4% to$1.71 billion on revenues up 4.7% to $12.2 billion. The operating profit margin rose to 14% from13.5%. Pre-tax profits improved by 7.9% to $1.67 billion, and net income was up by 3.7% at $1.07billion.
UPS said that it saw significant improvement in the supply chain and freight segment and goodgains in its international business. Its U.S. small package operation posted modest improvement inspite of a sluggish economy.
“This was a very good quarter for the company from many perspectives,” said Mike Eskew, UPS’schairman and CEO. “First, UPS turned in a solid performance in the face of a slower U.S. economy.We reached tentative agreement with the Teamsters on a new contract almost a year early. And weunveiled industry-leading service and technology innovations.”
In its core business of US domestic parcels, revenue rose by 1.9% to $7.45 billion and theoperating profit rose by 1.7% to $1.3 billion. Domestic volumes rose just 0.8%, leading to a 1.2%rise in average revenue per piece. Ground package revenue per piece improved by 2.4%.
In its international package business, the operating profit grew by 10.6% to $428 million onrevenue up 12.4% at $2.53 billion. International export volume increased 9.3%, and export revenuewas up 12.9%. Double-digit gains in both Europe and Asia were offset somewhat by mid single-digitgrowth in U.S. export volume, UPS pointed out.
The supply chain & freight business made a successful turnaround, generating an operatingprofit of $52 million compared to a previous year loss of $19 million. Revenue was up 6.1% at $2.1billion. Forwarding and logistics revenue rose 4.7% to $1.5 billion, while less-than-truckloadrevenue increased 12.1% to $521 million with 13.3% shipment growth.
Looking ahead, Scott Davis, UPS’s vice chairman and CFO, said: “Once again, UPS’s balancednetwork around the globe produced solid results even in the face of a lackluster U.S. economy.Fourth quarter results will be driven by good performance in our international operations andfurther gains in supply chain and freight. We expect slowing retail sales will restrain U.S.domestic volume growth. For the full year, we expect adjusted diluted earnings per share to bebetween $4.13 and $4.19, well within the range we provided at the beginning of 2007.”
