UPS’s Next-Day Shipping Rise Shows Gains in ‘Core Economy’
April 26, 2011, 4:36 PM EDTBy Mary Jane Credeur and Natalie Doss
(Updates with closing share price in last paragraph.)
April 26 (Bloomberg) -- United Parcel Service Inc.’s next- day package shipments rose in the first quarter as business customers refilled stockpiles to meet higher demand from the recovering economy, Chief Financial Officer Kurt Kuehn said.
Boxes shipped using the UPS’s Next Day Air service climbed in the “mid-single digits” as companies sought to restock goods faster after adapting to leaner inventory during the recession, Kuehn said in a telephone interview.
The gains reflect “some of the increased velocity in the core economy with manufacturing and finished goods,” Kuehn said. Businesses and retailers “are still cautious so they’ve kept inventories low. That means as demand shifts, then frequently customers do use the more premium services to cover gaps and shortages across their various supply chains.”
UPS, the world’s biggest package-delivery company, bolstered its full-year forecast after revenue per package climbed in all its sectors, led by a 7.2 percent jump to $13.13 in deferred U.S. domestic shipments. The Atlanta-based company and FedEx Corp. handle goods ranging from financial documents to pharmaceuticals and industrial parts, making them economic bellwethers.
Profit in 2011 will be $4.15 to $4.40 a share, compared with a February projection of $4.12 to $4.35, UPS said in a statement. The average estimate from 26 analysts surveyed by Bloomberg was $4.25 a share.
Kuehn said next-day letter delivery volumes declined slightly in the quarter, partially offsetting the gains in box shipments.
Net income rose 66 percent to $885 million, or 88 cents a share, from $533 million, or 53 cents, a year earlier, UPS said. That topped the 84-cent average estimate of 24 analysts in a Bloomberg survey.
Revenue jumped 7.3 percent to $12.6 billion, trailing estimates of $12.7 billion.
UPS rose 66 cents to $74.30 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 2.4 percent this year.
--Editors: James Langford, John Lear
To contact the reporters on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net; Natalie Doss in New York at ndoss@bloomberg.net
To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.
