Big Brown Reports Rise In Profits
International operating profits increased 300 percent to $44 million this quarter, while international package revenues climbed 10.2 percent to $839 million over revenues of $761 million for the same period last year.
The UPS is attributing the growth to successes the company has recently experienced in its Asia/Pacific and European operations. The UPS saw an 18.9 percent increase in express volume in the Asia/Pacific operation and a 19.4 percent increase in express and pan-European volume in the European operation. It also has seen increases in U.S.-to-international volume and shipping taking place between continents.
UPS spokesman Norman Black said that the economic downturn in the Asia/Pacific region has not affected business.
"In our case, what's driving the Asia/Pacific region and Europe is the continuing momentum of our operation there," said Black. "Our sales and marketing department, for example, has been bringing on new customers and expanding the business of existing customers."
Last year was the first year that UPS' international operations posted a profit -- turning the corner from red ink to black after 11 years in operation -- and every quarter the company is seeing increases in its international business.
Black also said the growth can be attributed to the fact that during this quarter, UPS added UPS-branded operations to 18 new cities inside China, as well as dedicated round-trip UPS flights to San Jose, Costa Rica, five days a week.
In general, company revenues for the quarter ended March 31, 1999, totaled $6.33 billion, up 8 percent compared to the $5.86 billion reported for the same period a year ago. Net income for the quarter rose to $499 million compared to the $352 million reported for the same period in 1998.
"We saw impressive growth in our express products in most corners of the world," said Jim Kelly, UPS chairman/CEO. "In the U.S., we continue to manage our operations extremely well in terms of service and cost, while focusing on the most profitable segments of business."
Kelly also cited the company's continuing emphasis on facilitating e-commerce, including the use of various e-commerce tools to support the logistics and supply-chain management of business-to-business transactions, as another reason for the company's strong performance. The UPS closed the first quarter by announcing UPS OnLine Tools, a new package of Web tools for companies conducting business over the Internet.
"UPS already has become the essential pipeline for electronic commerce,"
Kelly said. "That's one reason why we recently took the step of creating a dedicated electronic commerce sales force and why we're now expanding that team."
While Black could not offer any specifics about this team, he said that the UPS currently has a nationwide sales force of two dozen individuals.
The strong domestic and international gains across the company were also driven
by continuing improvements in product mix and yield and continued corporate-wide cost containment efforts.
Other results include:
*Domestic package revenues were $5.23 billion during the quarter compared to the $4.9 billion for the same period in 1998. This nearly 7 percent revenue increase reflects a 2.7 percent volume increase, improved product mix and higher yields. Domestic package operating profits rose from $594 million in 1998 to $765 million this year, up 28.9 percent, leading to a 42 percent jump in net income in the year's first quarter.
*Revenues for nonpackage operations jumped 26.6 percent, from $206 million in
1998 to $261 million this year. This increase is attributed to the continued growth and expansion of the UPS Logistics Group, which experienced an operating profit increase of 40.8 percent. Overall, operating profits for this segment declined from $35 million to $25 million.