UPS Reports Growth in All Segments

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United Parcel Service, Atlanta, reported strong financial performance yesterday for the second quarter, with all segments showing growth.

Highlights for the quarter ended June 30 included:

· U.S. package volume rose 1.2 percent, paced by a 9.1 percent increase in Next Day Air volume.

· International profitability increased more than 150 percent.

· Non-package profit climbed 34 percent.

Revenue for the quarter totaled $8.23 billion, up 7.1 percent from $7.68 billion in the same period in 2002. Consolidated operating profit increased 5.1 percent to $1.08 billion. Net income totaled $692 million, up 13.3 percent from the prior year's $611 million.

The international segment led the company's results, with revenue rising 19.8 percent to $1.37 billion and operating profit increasing 154.8 percent to $158 million. Operating margin for the segment was 11.5 percent, making this the third consecutive quarter with international operating margins over 10 percent. Worldwide export volume climbed 6.2 percent, led by a 15 percent gain in Asia.

Within the U.S. domestic segment, revenue increased 3.7 percent over the prior-year period to $6.12 billion while domestic operating profit fell 7.5 percent to $832 million. Profit declined mainly from increases in healthcare and pension costs. Domestic operating margins, while lower than last year, improved over the previous quarter.

"Looking to the third quarter, we expect to see additional improvement in our U.S. domestic segment, with volume growth in the range of 2 to 3 percent," chief financial officer Scott Davis said. "We also anticipate our international business will continue to show solid growth, and the positive trends in our non-package segment should continue."

The company remains on track to achieve its targeted earnings growth of 10 percent to 15 percent for the full year.

Meanwhile, UPS on Monday agreed to pay $10 million to settle part of a class-action lawsuit by about 1,000 current and former deaf employees who say they were discriminated against, according to news reports.

Under the settlement, UPS agreed to pay $5,000 to $60,000 to each plaintiff while also saying that it had not discriminated against hearing-impaired employees in the main area of their work. UPS also agreed to provide additional training for job applicants and employees who are hearing-impaired.

The settlement includes $4.1 million for plaintiffs' attorneys.

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