UPS Posts Strong 2Q Performance (7/22/99)
International operating profits almost tripled, rising to $65 million for the quarter compared to $23 million the year before. U.S. domestic package operating profits rose 17.5 percent to $878 million from $747 million during the same period a year ago.
Total company revenues for the quarter ending June 30, 1999, were $6.56 billion, up 7.4 percent compared to the $6.107 billion reported for the same period a year ago.
UPS conducts its business on a calendar year basis. For the first two quarters of 1999, the company reported total revenues of $12.891 billion, up 7.7 percent from the $11.966 reported for the first half of 1998. Net income for the first six months of 1999 totaled $1.087 billion, up 34.2 percent compared to the $810 million reported during the prior-year period.
For the second quarter, earnings per share on a diluted basis totaled $1.04 compared to 83 cents a year earlier. Earnings per share on a diluted basis for the first half of 1999 totaled $1.92 compared to $1.47.
In reviewing second quarter business trends, UPS noted it had announced its intent to acquire the assets and air rights of Challenge Air Cargo, the largest all-cargo airline serving Latin America. The company also rolled out its UPS Imports service, which allows international customers to import in a single currency from the four corners of the globe. On the e-commerce front, UPS already is seeing a significant increase in the number of companies constructing Web sites for the upcoming holiday season with built-in UPS shipping functionality.
One other significant e-commerce development during the quarter was the announcement that Hewlett-Packard and UPS had teamed up to develop the world's first digital solution for sending and tracking paper-based documents over the Internet. The new HP 9100C Digital Sender incorporates the UPS Document Exchange service to simplify the transmission of paper documents over the Net in a safe, secure and trackable mode. UPS introduced Document Exchange a year ago and last month, updated the product with a new version -- UPS Online Courier 3.1.
UPS divides its financial results into U.S. Domestic Package Operations, International Package Operations and Non-Package Operations. The latter category includes the UPS Logistics Group. The second quarter results for the three segments are as follows:
- In the United States, domestic package revenues totaled $5.434 billion during the second quarter compared to $5.09 billion for the same period in 1998. This nearly 7 percent revenue increase reflects a 3.5 percent volume increase, improved product mix and higher revenue per piece. Domestic package operating profits rose from $747 million in 1998 to $878 million this year, up 17.5 percent.
- International package revenues climbed 7.8 percent to $861 million compared to the $799 million reported during the second quarter of 1998. This increase was fueled in part by a 29.2 percent increase in express volume in the Asia/Pacific operation. Operating profits for international package operations increased from $23 million during the period in 1998 to $65 million this quarter.
- Revenues for non-package operations jumped 21.6 percent, from $218 million in 1998 to $265 million during the quarter this year. Overall, operating profits for this segment declined from $35 million to $33 million.
The strong domestic and international gains across the company were driven by a number of factors beyond the expansion of e-commerce and solid volume growth. They included continuing improvements in product mix, revenue per piece and continued corporate-wide cost containment efforts. Fuel costs were up slightly year-to-year.
During the second quarter, UPS unveiled the world's fastest package tracking system, deploying the first-ever device to both collect and send delivery information at virtually the same time. The company also was named in a Fortune magazine survey as one of the 50 Best Companies for Asians, Blacks and Hispanics. UPS is the world's largest express carrier and largest package delivery company, serving more than 200 countries and territories around the world. Headquartered in Atlanta, the company resides on the Web at http://www.ups.com.