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UPS 1Q EPS Tops Street, Sales Narrowly Miss

UPS Truck Man Holding Boxes


United Parcel Service (UPS) reported a 6.9% jump in first-quarter profit amid a post-holiday season that surpassed expectations, while revenue missed estimates on a lagging international segment.

The Atlanta-based shipper also announced Thursday that it agreed to buy Cemelog Zrt, a pharmaceutical-logistics company based in Hungary, for an undisclosed amount. The acquisition, which is expected to close in the second quarter, expands UPS’s health-care footprint in Europe.

Shares were up 1.5% at $84.75 in early morning trading Thursday.

For the latest period, UPS recorded a profit of $1.04 billion, or $1.08 a share, compared to $970 million, or $1 a share, in the year-ago period. First-quarter results included an after-tax gain of $36 million related to UPS’s attempt to purchase Dutch rival TNT Express. Adjusted per-share earnings, which exclude one-time items, checked in at $1.04 to beat Wall Street estimates for $1.01.

Revenue rose 2.3% to $13.43, below estimates for $13.46 billion.

Operating margin fell slightly to 11.8% from 11.9%, and operating expenses increased 2.5%.

UPS, considered an economic bellwether since it ships a wide variety of products, reported strong demand for its services in the U.S. The company said U.S. package revenue rose 3.4% and operating profit climbed 9%, while daily volume grew 4.5%.

The company has said its international business is under pressure from a shift in demand to low-cost shipping options in Asia, although it also has indicated Europe showed signs of improved stability earlier this year.

First-quarter international package revenue was level year-over-year, while the segment’s profit slipped 14%. Average volume per day fell 2.1%.

Daily export volume grew 3.8%, driven by an 8% increase in Asia. Daily exports in Europe rose about 3%, and U.S. exports grew slightly.

In its supply chain and freight segment, the packaging company reported revenue growth of 0.9%.

Earlier this week, rival shipper FedEx (FDX) was awarded a multibillion-dollar contract by the U.S. Postal Service to fly domestic mail. UPS noted that although it was disappointed, it has other contracts with the postal service.

Follow Matthew Rocco on Twitter @MatthewRocco