UPS today reported a solid 7.2% increase in diluted earnings per share for the second quarter to$1.04 on a 3.9% gain in revenue. Strong performance by the international package segment and
encouraging trends in supply chain and freight overcame a challenging U.S. small package market.International export revenues jumped 14% on double-digit volume growth, while UPS Freightless-than-truckload (LTL) revenue climbed 10.5% on a 12% increase in shipments, UPS pointed out.
For the three months ended June 30, 2007, UPS net income rose 4.1% to $1.1 billion. Revenuerose 3.9% to $12.19 billion, and the operating profit was up 4.1% to $1.77 billion. This left theoverall UPS Q2 operating margin up slightly at 14.5%.
In the USA, domestic package revenues rose 1.6% to $7.58 billion but operating profit dropped3.4% to $1.19 billion. The operating margin fell from 16.5% to 15.7%.
Ground volume was flat during the quarter, reflecting declining growth rates in bothindustrial production and business-to-consumer shipments; UPS said. Next Day Air® volume increased1.6% to partially offset a 4% decline in deferred air volume. Total U.S. revenue per piece remainedfirm, up 1.7%, with revenue per piece on ground volume rising 3%.
In contrast, UPS international package revenues grew 12% to $2.5 billion, and the operatingprofit rose 14.7% to $475 million. The operating margin grew to 19% from 18.5%.
Total export volume increased 10.4%, UPS said. Europe posted an 11% export volume gain,reflecting strong cross-border growth. Asia export volume jumped 25% with particularly stronggrowth out of China.
UPS said that its Supply Chain and Freight business was improving its results thanks toperformance improvement initiatives launched in the second half of 2006. The division increasedoperating profit to $98 million from $47 million, doubling the profit margin to 4.6%. Revenues wereup 3.4% to $2.1 billion.
“The company’s total performance reflects the benefits of our truly global network,” saidMike Eskew, UPS’s chairman and CEO. “Strong gains in our international package segment offset alack of growth in the U.S. business. We’re also executing well in our supply chain and freightbusiness and are pleased with the profit improvements in this segment. We remain confident in thelong-term growth prospects that the dynamic global marketplace offers UPS.”
Looking ahead, UPS CFO Scott Davis said he expected gradual growth in US small packagevolumes in Q3, with margins above 15%. International volumes would continue to grow at double-digitrates.
UPS expects diluted earnings per share for the third quarter to fall within a range of $0.99to $1.04 compared to the $0.96 reported for the prior-year period. Davis also reaffirmed thecompany’s annual target of a 6-to-10 percent increase in adjusted diluted earnings per share.
