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UPS' Q2 profit up 9.1pc yoy at US$1.38 billion on 5pc revenue growth

MAJOR global package delivery compnay, United Parcel Service (UPS), says second quarter net income rose 9.1 per cent year on year to US$1.38 billion on five per cent higher revenue at $15.75 billion. Operating income for the quarter grew 8.7 per cent to $2.22 billion.

Revenue rose in all three of the company's operating segments, and operating income was up in both the US domestic and supply chain/freight segments. Operating income declined in the international segment due to foreign exchange effects.

Average daily volume rose for all products in both the US domestic and international segments, but, again, currency headwinds pushed revenue per piece down in the international segment, reported New York's Air Cargo World.

Looking at the quarter on a segment-by-segment basis: US domestic package volumes and per-package revenues were up strongly for all three products, and segment operating income rose 13.1 per cent.

Commenting on the results, the company pointed to the continuing switch from physical to online shopping, saying the US domestic segment "benefited from growing demand for e-commerce deliveries."

Average daily package volumes were well up for all products, led by an 11 per cent increase for Deferred Air, with Next Day Air up 6.4 per cent and Ground up 4.2 per cent. Per-package revenue was up by low-single-digit percentages for all three products, and up three per cent overall, with the increase helped by both base-rate price increases and higher fuel surcharges.

The combination of growth in both volume and yield led to a 13.1 per cent increase in segment operating income, and the US domestic package segment achieved an operating margin of 14.3 per cent.

The international package segment saw increasing demand for cross-border shipments, which "generated solid top-line improvements" for UPS' international package division. Average daily package volume was up 5.6 per cent for the segment, led by an 11.6 per cent increase in international export volume, while international domestic volume rose 1.3 per cent.

The International segment was hit by negative currency effects, with operating income falling to $583 million, down by 4.9 per cent compared to 2Q16.

The supply chain and freight segment saw revenue in the second quarter rise by 12 per cent, led by a 14.1 per cent gain in the forwarding and logistics unit, while operating income jumped 24 per cent. Operating margin was at a healthy at 8.4 per cent.