• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

UPS Delivers 21 Percent Profit Increase in Second Quarter

Posted on: Saturday, 23 July 2005, 00:00 CDT

Jul. 22--UPS revved up its performance in the second quarter, boosting profit by nearly 21 percent despite stiff competition.

Better-than-expected gains in international package shipments helped push the Sandy Springs-based delivery giant past analysts' projections. Second-quarter profit was $986 million, or 88 cents a share. That's 2 cents better than analysts were expecting on average, according to Thomson First Call.

Total revenue rose 15 percent year-over-year, to $10.19 billion, also beating analysts' projections.

Fueled by growth in Asia, the company's international package operations continue to turn in double-digit results. Asian export volume was up nearly 40 percent, with shipments into and out of China doubling. Total international package revenue jumped nearly 23 percent.

As recently announced, UPS plans to open a cargo hub in Shanghai, as well as launch a domestic express service to take advantage of Asia's hottest market for delivery services.

"China is the keystone of our Asia strategy," Chief Financial Officer Scott Davis told analysts Thursday in a conference call.

U.S. deliveries also gained ground in the second quarter, providing a bright spot considering UPS has lost market share to FedEx and other competitors.

Domestic package revenue grew nearly 6 percent, and deliveries were up 3.2 percent, a considerable improvement over the first quarter's flat volume performance.

"(It's) the best growth rate we've seen since the third quarter (of 2004)," said Morgan Stanley analyst James Valentine in a research note Thursday.

Still, Valentine noted, FedEx recently reported its ground shipment volume was up 9 percent for the quarter ending in May.

Davis of UPS said the company's U.S. market position has stabilized after a push this year to increase sales to medium-size companies and to roll out more choices for tracking and sending packages.

"You're seeing the results of those (initiatives) in the second quarter," Davis said.

The second-quarter performance prompted UPS to bump up its earnings outlook for the rest of the year, toward the higher end of previous estimates. The company projects an 18 percent to 20 percent increase in earnings per share for 2005.

UPS shares closed Thursday at $72.34, down 48 cents.

-----

To see more of The Atlanta Journal-Constitution, or to subscribe to the newspaper, go to http://www.ajc.com.

Copyright (c) 2005, The Atlanta Journal-Constitution

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

UPS, FDX,

Source: The Atlanta Journal and Constitution

More News in this Category