UPS’ 1st-Quarter Net Income Climbs 8.5%
United Parcel Service Inc., the world’s largest package delivery service, increased first-quarter profit 8.5% as the company benefited from higher overseas shipments and favorable currency exchange rates.
Net income climbed to $611 million, or 54 cents a share, from $563 million, or 50 cents, before an accounting change in the 2002 period. Sales rose 5.8% to $8.02 billion.
International shipments rose 3.3%, the biggest gain in two years, as the number of packages sent from countries other than the U.S. increased. The dollar’s 23% drop against the euro in the last year made overseas revenue worth more when converted into U.S. currency.
“International trade is growing faster than the domestic economy and has been for some time,” said Roger Mendel, an analyst at Northern Trust Corp., which held 6.6 million United Parcel shares as of December.
An increase in U.S. shipments that began in March continued this month, United Parcel said. The company expects second-quarter profit of 58 cents to 62 cents a share, above the current average forecast of 57 cents by analysts polled by Thomson First Call.
United Parcel shares climbed $2.19, or 3.8%, to $60.06 on the New York Stock Exchange. It was the stock’s biggest percentage gain in nine months.
Shipments from Asia, primarily electronics and computer components, climbed 16%. From Europe, shipments rose 11%.
U.S. shipments fell 1.2% because of winter weather and the loss of some ground business to FedEx Corp., analysts said. Fed- Ex started its home delivery business in 2000. United Parcel’s ground shipments fell 1.5% in the first quarter, the eighth straight decline.
United Parcel hasn’t fully recovered business that went to rivals amid concern last year that its drivers would strike, analysts said.
The switch this year of most of its Mail Boxes Etc. postage stores to the UPS Store and a new logo are helping results, Davis said. Earnings from services that don’t deliver packages, including customs clearance services and Mail Boxes Etc., almost doubled.
