China volumes aid UPS results

A doubling in shipments out of China helped UPS increase earnings by a better than expected 22 per cent in the second quarter.

Rapid international expansion, especially in Asia, has helped the package delivery and logistics group offset slower growth in the US over recent months.

But there were signs in the second quarter that the domestic business was recovering strength, following management restructuring and an increased focus on medium-sized business customers.

Supply chain solutions, the group’s smallest but fastest-growing division, also became a more significant contributor to revenues following the acquisition last year of Menlo Worldwide Forwarding, an international freight business.

UPS, in common with rivals FedEx and DHL, is diversifying into a range of freight forwarding and supply chain management services.

The company expected to complete its Dollars 1.25bn acquisition of Overnite Corporation, a US truck operator, next month.

Net earnings in the three months ended June 30 were Dollars 986m, or 88 cents a share, up from Dollars 818m, or 72 cents a share, in the same period last year. The results beat Wall Street’s consensus expectation of 86 cents a share.

UPS lifted its full-year profit forecast to the high end of previous guidance, with earnings expected to be 18-20 per cent higher than last year’s Dollars 2.90 a share.

International export volume rose 18 per cent, helped by “steady” growth in the world economy. Asian exports were up nearly 40 per cent.

This month the group announced plans to launch a domestic express delivery service in China and build a new hub for Asian operations in Shangahi.

In the US, domestic parcel volume, which accounts for nearly 70 per cent of group revenues, increased 3.2 per cent. Total revenues were Dollars 10.2bn, up nearly 15 per cent from last year. Supply chain solutions contributed Dollars 1.25bn, up nearly 85 per cent.