UPS Profit Jumps 90 Percent to $845 million

UPS saw its net profit grow 90 percent in the second quarter to $845 million, the strongest profit in nearly two years, on a sharp surge in demand in international and domestic expedited business, the company said Thursday.

UPS said it expects that momentum to continue for the rest of the year and raised its earnings forecast for the rest of 2010 despite what it called “the anticipated slow pace of the U.S. recovery and a cautious outlook for Europe.”

With its strongest quarterly earnings since the third quarter of 2008, UPS now projects its net profit for the full year could grow up to 50 percent over last year, pushing earnings beyond $3 billion.

Overall revenue grew 12.7 percent in the three months ending June 30 over the same period a year ago to $12.2 billion, including a 23.4 percent expansion in international revenue, to $2.8 million. The company’s Supply Chain and Freight division grew 20.6 percent, to $2.2 billion, including a 26.6 percent jump in the forwarding and logistics operations.

The core domestic parcel and trucking business grew at a more modest rate, with volume in the U.S. domestic package business edging up only 1.2 percent. But pricing in the domestic market expanded sharply, growing more than 11 percent for air express and 4 percent for the foundation domestic ground parcel delivery.

That gave the domestic package business a $748 million operating profit in the quarter, 57.1 percent better than a year ago.

But the international arena, where UPS reduced capacity during the economic downturn, showed a far better profit margin, with a $521 million operating profit that was the strongest performance in that division since the fourth quarter of 2007.

For the fiscal quarter that ended in May, rival FedEx earned $419 million and said last month that economists are being too pessimistic about the pace of global recovery.
(Source:www.joc.com)