UPS today, July 23, reported operating profit of $895 million on a 16.7 percent revenue decline for the second quarter ended June 30. Adjusted diluted earnings per share were $0.49 compared to $0.85 last year. The company said the quarter’s results were affected adversely by continuing weakness in global economic activity.
The company said ddjusted diluted earnings per share exclude a charge for the remeasurement of certain foreign currency obligations that did not qualify for hedge accounting treatment. The after-tax charge was $48 million and had no impact on operating income or cash flow, according to UPS; including this noncash charge, diluted earnings per share were $0.44.
“The global economic environment pressured our performance, but UPS remains financially very strong,” said Scott Davis, chairman and chief executive officer of the Atlanta-based company. “We continue to invest in growth opportunities, even as UPSers improve productivity and help our customers manage through these challenging times. We are a company that can weather this recession, positioning ourselves well to benefit when economic recovery occurs.”
Consolidated revenue was $10.8 billion compared to $13.0 billion for the prior-year quarter, while consolidated volume was 914 million packages, down 4.7 percent. Net income was $445 million compared to $873 million, down 49 percent.
“The economic environment continues to be difficult,” said Kurt Kuehn, chief financial officer. “Declines in both our domestic and international businesses appear to be stabilizing, but volumes will remain significantly below last year’s levels. Although declines in economic indicators are less dramatic than earlier in the year, questions remain as to when business activity will begin to strengthen.”
Kuehn said the business environment in the third quarter should be similar to the second quarter. “We are exceeding targeted cost savings without compromising our high levels of service, while also investing for the future,” he said. “We are managing our business with a keen eye on balancing cost cutting with strategic investment.”