UPS earnings up 14% as it avoids less profitable contracts
Package delivery giant UPS has seen double-digit earnings growth in its first quarter of 2015, on “robust” international growth and an improved domestic US situation. The Atlanta-based firm said today that its operating profit rose 11% to $1.7bn in its latest three months, pushing diluted share earnings up 14% year-on-year to $1.12 per share.
Although revenue growth was more tempered at 1.4%, up to $14bn, the company said its continued investment was paying off.
Volumes grew by 2.8% year-on-year to 1.1bn packages, driven by 9.4% growth in European expert volumes.
Commenting on the results, chief financial officer Kurt Kuehn said: “Solid performance across all three business segments was led by positive momentum in International, gains from revenue management and productivity improvements in the US.
“We remain on plan to meet our guidance for full-year 2015 diluted earnings per share of $5.05 to $5.30, a 6%-to-12% increase over our 2014 adjusted results.”
Segments
The UPS domestic business in the United States saw its revenue up 3.8% year-on-year in the first quarter, to $8.8bn, as daily package volumes rose 2.4%.
This was slower growth, the firm said, as it chose to avoid some less profitable contract renewals. Operating profit as a result grew 11% year-on-year, to $1bn.
The company said it saw growth in its Deferred Air service, up 12% year-on-year, with the SurePost service popular with e-commerce merchants up 7%. UPS Ground saw its revenue per package up 3.1% thanks to the extension of dimensional weight pricing at the start of the quarter, pulling up domestic US revenue-per-package 1.3%.
UPS saw a 5% year-on-year decline in its international package revenue, to $3bn, although adjusting for currency movements would have seen 2.4% growth. Revenue was impacted by lower fuel surcharges.
The company said its international operating profit was up 14% to $498m on the back of volume growth and price increases, as well as a cut in fuel costs.
Export shipments jumped 6.7% led by European growth of 9.4%. In Europe, the company said its export volume has grown at an annual rate of approximately 9% over the past 10 years.
Elsewhere, UPS said its Supply Chain and Freight segment saw its revenue edge up 1.3% to $2.2bn, hampered by currency movements and reduced fuel surcharges. Operating profit was up to $151m, but held back by investment in technology and infrastructure.
