UPS reported a mixed performance in its second quarter
For the quarter ended June 30, 2002, revenue totaled $7.68 billion, up 2.5% from the $7.49 billion for the prior year. Consolidated operating profit declined 1.2% to $1.03 billion. Net income declined to $611 million compared to the prior year’s $630 million, and earnings per diluted share dropped 1.8% to $0.54 versus $0.55 recorded during the period in 2001.
During the quarter, the company’s U.S. domestic package business experienced declines in package volume that accelerated as the quarter ended. The declines are attributable both to slow economic conditions and customers diverting package volume to competitors due to unresolved contract negotiations with the International Brotherhood of Teamsters.
Within the U.S. domestic segment, revenue totaled $5.91 billion, down 1.2% compared to $5.98 billion for the prior year. Operating profit declined 6.9% to $899 million from the $966 million reported in 2001. Total U.S. domestic package volume declined 2.6% for the quarter, with volume declining 4% in June.
In the international segment, operating profit more than doubled to $62 million from $24 million on a 9% increase in revenue to $1.14 billion. Export volume continued to outperform market growth, posting an 8.8% increase with double-digit growth in Europe and Asia. The quarter benefited from the opening of an intra-Asia air hub in the Philippines, which improves service levels within Asia and to Europe.
In the non-package segment, which includes Supply Chain Solutions, revenue increased 37% to $630 million. Operating profit totaled $67 million, up from the $51 million reported the prior year.
“Clearly the contract talks and the continuing weakness in the U.S. economy reduced earnings in the domestic business, but we’re pleased with the momentum outside the United States,” said Scott Davis, UPS’s chief financial officer. “International operations turned in a particularly strong performance and Supply Chain Solutions continues to show quarter-to-quarter improvement.”
Citing the uncertainty regarding labor negotiations, Davis said UPS was unable to offer future guidance at this time. “We will provide additional information on July 23 when we release more detailed earnings information and conduct our scheduled conference call,” he said.
