UPS Revenue, Net Income Rise in 1Q

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United Parcel Service yesterday reported solid first-quarter results driven by its international and non-package businesses.

But the U.S. package segment experienced volume declines in the first two months of the quarter due partly to a severe winter and a difficult economy, the company said.

For the quarter ended March 31, revenue totaled $8.02 billion, up 5.8 percent from $7.58 billion in the prior-year period. Operating profit fell 0.2 percent to $945 million. Net income rose 24.4 percent to $611 million from the prior year's $491 million.

Operating profit for the international package segment more than quadrupled to $134 million, led by a 10.3 percent rise in export volume and a 23.5 percent increase in revenue. Operating profit for the non-package segment almost doubled to $107 million on an 11.4 percent gain in revenue.

Within the U.S. domestic segment, revenue totaled $6 billion, up 2 percent from $5.9 billion the prior year. Operating profit declined 18.3 percent to $704 million due to a volume decline of 1.2 percent and adverse costs. About half of the volume decline was attributed to the bad weather in February. Profit also was hurt by higher fuel costs. Next Day Air express volume grew 3.9 percent.

UPS also said volume trends began improving in March and continued into April.

"We expect domestic package volume to continue the momentum begun in March and April and post between a 1 to 2 percent increase over last year's second-quarter results," UPS chief financial officer Scott Davis said. "All three domestic product lines should show positive growth rates, with Next Day Air remaining the strongest."

Davis also said international growth trends should continue, and UPS is on track to achieve its goal of a 10 percent to 15 percent rise in share profit for all of 2003.


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