UPS Inc. reported double-digit gains in the first quarter as a result of the strength of its global business as well as economic conditions.
The Atlanta-based multinational package delivery company and a provider of supply chain management solutions said results were lifted by double-digit operating profit growth in its International and Supply Chain and Freight segments. The Freight group showed “solid” less-than-truckload pricing and tonnage growth, the company said.
Net income was up 15% to $1.34 billion, or $1.55 per diluted share, from $1.17 billion, or $1.33, in the same year-ago quarter.
Revenue bounded 10% to $17.11 billion from $15.51 billion the year before.
UPS said for the quarter it made capital expenditures of $1.5 billion to support investment strategies.
Abney by Mark Lennihan/AP
“Top-line growth in our business was strong across all business segments, reflecting the power of UPS’ global solutions and continued favorable economic conditions,” said CEO David Abney.
The gains were accomplished despite weather conditions that muted quarterly results in the United States, the company said.
Domestically, revenue rose 7.2% to $10.23 billion compared with $9.54 billion a year ago. And a 4.6% increase in package volumes was fueled by the growth of online purchases. However, severe winter in many parts of the United States caused “headwinds” and impacted operating profit by $85 million. The company also cited Saturday deployment, network projects and increased pension expenses as other factors.
Internationally, however, revenue vaulted to $3.53 billion from $3.07 billion, despite two fewer operating days in many countries. The company said currency-neutral revenue increased 8.7%.
Operating profit rose to $594 million, from $518 million, due in part to higher export shipments.
“Each of our International regions is contributing to our financial gains, and we expect this strong momentum to continue,” said Abney.
The Supply Chain and Freight segment produced quarterly revenue of $3.35 billion compared with $2.9 billion the year before. The division’s operating profit rose to $170 million from $149 million.
According to the announcement, the Forwarding business led all units with 27% revenue growth. UPS Freight revenue increased 9.9% on LTL pricing and tonnage growth.
“Our focused business strategies are producing strong results in both the International and Supply Chain segments,” said Richard Peretz, chief financial officer. “The benefits from our investments, new multiyear transformation efficiencies and stronger pricing position us well for shareowner value creation.”
For the full year, the world’s largest package delivery company expects adjusted earnings per share to be in a range of $7.03 to $7.37, the company said.
FactSet says analysts anticipate earnings of $7.25.
UPS forecast capital expenditures for the year between $6.5 billion and $7 billion.
Separately, on April 25, the company announced it is offering a voluntary retirement plan with a financial buyout to an undisclosed number of U.S.-based managers.
A UPS official told Transport Topics to be eligible, an employee must be at least age 55 and have 10 years or service, or be 65 with five years with the company. The seniority requirements will be higher for some managers with specialized skills.
The eligibility date to decide whether to accept the cash package is June 15.