Growth Drives UPS Earnings Higher

Trucking and parcel delivery giant UPS on Wednesday reported it increased its profit during the second quarter of the year due to growth across all business segments. Net income increased 7.3% from a year earlier to nearly $1.49 billion as revenue increased 9.6% to almost $17.5 billion.

“UPS is making great progress on our transformation initiatives to enhance profitable growth and improve operating leverage,” said David Abney, UPS chairman and CEO. “We are confident that our strategies will position the company to provide improved value for customers and shareowners.”

UPS’ U.S. domestic segment experienced strong revenue growth of 6.3%, totaling $10.4 billion, driven by e-commerce demand and increased revenue per piece over the prior year, according to the company. Operating profit, down from $1.26 billion a year earlier to $939 million in the most recent quarter, was primarily reduced by planned increases in pension expense and cost for ongoing network projects.

The international segment delivered its 14th consecutive quarter of currency-neutral double-digit operating profit growth, totaling $618 million. The segment enjoyed its highest second quarter operating profit ever, led by the Europe region.

The supply chain and freight segment delivered another quarter of double-digit growth in revenue, up 16% from a year earlier and totaling $3.5 billion, as well as adjusted operating profit of $247 million. Unadjusted operating profit was $212 million. UPS Freight revenue increased 13% on higher pricing and tonnage gains, according to the company.

"There seems to be a new focus on pricing and service at UPS - both keys to a successful company that, in our view, didn't get enough serious attention before," noted David Ross, a transportation analyst at Stifel, in an email note to investors.

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Originally posted on Trucking Info