UPS 2Q earnings soar 71 percent on 13 percent revenue growth
Friday, July 23, 2010
Press release from the issuing company
UPS today announced diluted earnings per share of $0.84 for the second quarter of 2010, a 71% jump over the adjusted earnings of the prior-year period. Global revenue increased 13%, generating a 57% increase in operating profit to $1.4 billion.
On a reported basis, diluted earnings per share increased 91% over the $0.44 in the second quarter of 2009.
"UPS fired on all cylinders in the second quarter even in the face of a mixed global economic environment," said Scott Davis, UPS's chairman and CEO. "Thanks to superb execution, our U.S. domestic reorganization is producing better than expected results. Substantial growth in our international segment continues to outpace the market. It's clear the strategic direction we've set for the company is proving successful."
Based on expectations of continued momentum in every segment, UPS has increased its guidance for 2010 adjusted earnings to a range of $3.35 to $3.45 per diluted share, a 45%-to-50% increase over last year.
For the three months ended June 30, 2010, operating margin expanded 320 basis points to 11.5% and consolidated volume totaled 948 million packages, a 4% increase. Revenue per piece improved 7%, reflecting higher base rates, fuel surcharge increases and heavier average shipment weight.
In the prior-year quarter, UPS took a $48 million after-tax charge for the remeasurement of certain foreign currency obligations that did not qualify for hedge accounting treatment. That adjustment reduced second quarter 2009 diluted earnings per share by $0.05.
As the quarter ended, President Obama named UPS Chairman and CEO Scott Davis to the President's Export Council. As an industry leader, Davis will advise the administration on policies and programs to improve U.S. exports.
U.S. Domestic Package
Average daily package volume rose more than 1% during the quarter, driven by a 2% growth in ground volume. Revenue per piece improved 6%, primarily through higher fuel surcharges and increases in base pricing. Yields on air products climbed more than 11%.
Non-U.S. domestic volume increased 24%, driven by an acquisition in Turkey in the third quarter of last year as well as 13% organic growth, powered by strength in core European countries and Canada.
During the quarter, UPS announced new alliances with its local service partners in Malaysia and Vietnam. These agreements will provide greater access to UPS's broad portfolio of services and superior global network for customers in these important emerging markets.
Supply Chain and Freight
UPS Freight revenue grew 10% over last year, driven by improved yield and higher weight per shipment. As expected, UPS Freight returned to profitability in the second quarter.
During the quarter, UPS hosted its fifth annual Healthcare Forum in Washington, D.C. Healthcare logistics experts gathered to discuss UPS solutions that create more efficient supply chains. In addition, trends were discussed on healthcare reform, regulatory issues and opportunities in emerging markets.
"Despite the anticipated slow pace of the U.S. recovery and a cautious outlook for Europe, we are confident in our ability to grow the business and improve profits," Kuehn added. "Therefore we are raising our full year 2010 guidance with expected adjusted earnings growth of 45%-to-50% per share."
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