UPS Net Income Rises 20% in Q3

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United Parcel Service reported solid third-quarter growth yesterday, with revenue rising 7.7 percent and net income increasing 20.4 percent.

For the three months ended Sept. 30, worldwide average daily volume rose by 445,000 packages to 13.7 million, or 3.4 percent. International export package volume grew 13.2 percent while the UPS Supply Chain Solutions division posted revenue growth of 10.1 percent.

Consolidated revenue totaled $8.95 billion, up 7.7 percent from $8.31 billion in the prior-year period. Consolidated operating profit rose 9.7 percent to $1.26 billion. Net income for the quarter was $890 million, up from $739 million.

The third-quarter 2003 results included a $24 million gain on the sale of UPS Aviation Technologies as well as a $22 million tax benefit from a favorable tax ruling. The most recent quarter includes a $99 million reduction to income taxes due to the resolution of various tax matters.

Excluding these items, third-quarter operating profit increased $135 million to $1.26 billion, a 12 percent gain. Adjusted net income totaled $791 million versus $702 million in 2003, up 12.7 percent.

International package revenue climbed 21.6 percent to $1.67 billion on a 13.2 percent gain in export package volume and a 4.1 percent increase in international domestic package volume.

U.S. package revenue increased 4.4 percent to $6.49 billion while operating profit climbed 3.9 percent to $857 million. Both were affected by a difficult September during which hurricanes and tropical storms disrupted commerce nationwide and UPS operations in the Southeast and East, the Atlanta company said.

Average U.S. daily ground volume grew 4.5 percent for the quarter. Average revenue per piece rose 1.5 percent for all U.S. products.

Developments in the quarter included this month's agreement to buy Menlo Worldwide Forwarding. UPS added air capabilities to its Trade Direct line of services, helping customers eliminate the need for warehousing after importing. Last month, UPS added three more flights to its "around-the-world" network to accommodate expanding package flows between Asia and Europe. And on Oct. 18, the Transportation Department finalized its earlier award of aviation rights allowing UPS to triple its direct access to China.

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