UPS reports higher 1Q profit

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Updated Apr 30, 2012

Ups Freight

UPS on Thursday, April 26, announced first-quarter 2012 net profit rose to $970 million from $915 million a year ago. Total revenue rose 4.4 percent to $13.14 billion from $12.58 billion. Operating profit for the U.S. Domestic and Supply Chain and Freight segments increased 13 percent and 19 percent, respectively.

“These results demonstrate that UPS is providing its customers with the solutions needed for today’s ever-changing market conditions,” said Scott Davis, UPS chairman and chief executive officer. “We will continue to invest and develop innovative services that facilitate global commerce, ensuring UPS’s long-term success.”

In March, UPS announced its intention to acquire European company TNT Express, an addition the company said would further expand its portfolio of solutions and geographic footprint. UPS believes the complementary strengths of both organizations will create a customer-focused global platform and a leader in the logistics industry.

For the quarter, U.S. Domestic revenue increased 6.1 percnet driven by daily volume growth of 4.5 percent, and operating profit improved 13 percent. Daily volume for deferred products jumped 9.9 percent, and UPS Next Day Air volume climbed 5 percet, driven primarily by o-line retail growth. Ground volume improved 4 percet on strong demand for lightweight shipping options.

Increases in revenue per piece produced by higher base rates and fuel surcharges were offset mostly by changing product and customer mix as e-commerce continued to drive volume growth.

Operating profit in the Supply Chain and Freight segment climbed 19 percent on revenue growth of 1.3 percent. Operating margin in the Forwarding business expanded due to growth in customized solutions and brokerage services, in addition to improved productivity; however, revenue was impacted negatively by declines in both tonnage and yield as excess capacity in the market continues.

Demand for UPS healthcare solutions drove revenue gains in the Logistics business unit. Operating margin expanded despite the impact of continued investment in the healthcare network.

Earlier this month, UPS announced an expedited heavy freight option for shipments between the United States and Mexico. UPS CrossBorder Connect now allows customers to ship heavy freight on the ground and realize improved transit times over traditional less-than-truckload carriers.

“UPS delivered earnings growth in line with our expectations, driven by the results of the U.S. Domestic and Supply Chain and Freight segments,” said Kurt Kuehn, chief financial officer. “Our performance reflects the strength of our global portfolio and the adaptability of the UPS operating model.”