UPS's Europe and Asia units offset weaker US

United Parcel Service, the world's biggest package delivery and logistics company, trumped market expectations with a 3.3 per cent fall in first-quarter net income to Dollars 563m, as international business offset weaker domestic demand.

Net earnings were Dollars 0.50 per diluted share, compared with Dollars 0.51 last time, and above analysts' average forecast, compiled by Thomson/ First Call, of Dollars 0.47 per share.

Net income fell from Dollars 582m, which excludes a Dollars 26m charge for adopting a new accounting standard. International export volume growth was led by Europe, up 13 per cent, and Asia, up 11 per cent. UPS's new Asia regional hub in the Philippines, opened this month, is expected to strengthen its Asian export business. In the year since UPS opened its direct flights to China, revenues doubled to Dollars 200m.

However, this package delivery business could be jeopardised by Beijing's attempt to curb express delivery by private companies such as UPS and FedEx. The industry is lobbying to overturn this.

UPS said it had yet to benefit from the recovering US economy, but credited cost controls and increased productivity for a 2 per cent rise in its US package unit's operating profit, to Dollars 862m.

Total revenue rose 1.9 per cent to Dollars 7.58bn and consolidated operating profit increased 0.3 per cent to Dollars 947m. Revenue in its newly streamlined non-package business rose 61.6 per cent to Dollars 622m.

UPS is sticking with its earlier earnings guidance of Dollars 0.50-0.55 for the second quarter.

Performance in the second quarter will depend on improvement in the US economy and the outcome of negotiations with the Teamsters union.

UPS remains optimistic it will reach agreement with the union, which represents 230,000 of the 340,000 UPS workers in the US and whose contract expires on July 31.

April 18, 2002 — Justin Bachman, Associated Press:
"First-quarter net income was little changed from a year ago at United Parcel Service, which said Thursday it anticipates more difficult times ahead in a still-struggling economy. But strong international shipping volumes helped UPS, the world's largest package hauler, beat Wall Street forecasts. UPS earned $563 million, or 50 cents per share, in the first three months of 2002, with one less business day. That compares to a profit of $556 million, or 48 cents per share, in the same period last year, including a $26 million reduction to adopt a new accounting standard for derivatives. The results were 3 cents a share better than the consensus forecast of analysts surveyed by Thomson Financial/First Call. UPS said it remains comfortable with analyst forecasts of per-share earnings between 50 and 55 cents in the second quarter. 'We are not seeing the economy coming back in the short term,' UPS chief financial officer Scott Davis said in a conference call with analysts. 'Certainly, we would like to see that happen, but we're assuming that we're going to see the same economy in the second quarter that we saw in the first quarter.' In a later interview, Davis said the company has 'no reason not to believe' forecasts predicting more robust economic activity in the second half of 2002. Revenue rose 1.9 percent, to $7.57 billion, from $7.43 billion in the same quarter of 2001. The company reduced its quarterly revenue by $75 million as it changed the revenue reporting of all its divisions so that all revenues will be net. Previously, some businesses UPS acquired reported gross revenues. The company's average daily volume in Asia – where UPS opened a hub earlier this month in the Philippines – rose 11 percent. European export volume was up 13 percent. But in the United States, where the company earns the majority of its income, ground volume fell 1.6 percent and higher-margin air shipments were down 1.1 percent. Consolidated average daily volume dropped 1.3 percent, to 13.2 million packages. Analysts praised the Atlanta-based freight company's efforts to control costs during the downturn, which has not affected yields. 'It's a rational market for pricing right now,' Davis said." (Source: Associated Press, Justin Bachman reporting)

from Eye for Transport 19.4.02
UPS earnings exceed expectations

United Parcel Service earned $563 million, or 50 cents a share, in the first quarter, down 3.3% from the $582 million, or 51 cents a share, a year earlier. However, the figure beat the company's estimate three months ago of 40 cents to 47 cents per share. The consensus forecast among securities analysts was 47 cents a share. (4/19/2002)

Revenue rose 1.9% to $7.58 billion from $7.44 billion, as strong growth in UPS' international package business and logistics subsidiary offset a slide in daily domestic package volume. Average daily package volume increased 13% in Europe and 11% in Asia, while total domestic volume dropped 1.3%, with next-day air, deferred and ground services all reporting modest declines.

The company also reported strong gains in its UPS Logistics Group. Net revenue for the group rose 53%, though two-thirds of that came from acquisitions, notably its new Uni-Data subsidiary in Germany.

An overall gain of 61.6% in its non-package businesses, primarily logistics – from $385 million last year to $622 million this year – more than offset a $73 million drop in revenue from its U.S. domestic package business, to $5.9 billion, and a $20 million decline in its international package revenue, to $1.05 billion.

Looking ahead, Chief Financial Officer Scott Davis said UPS has yet to see any significant evidence of a rebound in U.S. economic activity. Nonetheless, UPS is maintaining its earnings guidance for the second quarter, given three months ago, of 50 cents to 55 cents a share. He cautioned, however, that the state of the economy and its contract negotiations with the Teamsters union could affect earnings.

UPS' contract with the Teamsters expires on July 31. Both sides have expressed optimism that they can reach a settlement without a strike. Five years ago the Teamsters went on strike for 15 days, costing the company hundreds of millions of dollars in lost business.