Home » 3PL/4PL, Breaking News » UPS posts Q1 gains but falls short of estimates

Atlanta-based United Parcel Service (UPS) announced first quarter 2012 earnings per share of $1, a 10 percent improvement over the prior-year period that however falls short of analysts’ expectations of about $1.01 per share as Asian exports and other global shipments declined.

Consolidated revenue increased 4.4 percent to $13.1 billion. Operating profit for the U.S. domestic and supply chain and freight segments increased 13 percent and 19 percent, respectively, the world’s biggest package service said in a statement.

For the quarter, U.S. domestic revenue increased 6.1 percent, driven by daily volume growth of 4.5 percent. Operating profit improved 13 percent over the prior-year period.

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

International revenue was $2.97 billion, an increase of 2.3 percent compared to the same period last year. Revenue per piece was down slightly, though up 2 percent on a currency-neutral basis. Continued weakness out of Asia and increased intra-regional volumes also negatively impacted yield growth, the company sid.

UPS export volume growth continued to outpace the market at 5.4 percent, with solid gains in Europe, intra-Asia and Mexico. Operating margin declined to 13.8 percent, reflecting the impact of increased fuel cost, changing product mix and shifting trade patterns.

Operating profit in the supply chain and freight segment climbed 19 percent on revenue growth of 1.3 percent. Operating margin expanded to 7.7 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 negatively impacted 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.

On the outlook for the year, Kurt Kuehn, UPS’s chief financial officer, said:
“UPS delivered earnings growth in line with our expectations, driven by the results of the U.S. domestic and supply chain and freight segments… Therefore, we remain confident in our previous guidance for 2012 diluted earnings per share of $4.75 to $5, an increase of 9 percent to 15 percent over 2011 adjusted results.”


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