UPS: Strong revenue, profit growth on 5 percent rise in small package volume

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Package delivery company UPS Inc. reported solid revenue and profit growth for its most recent quarter based on a healthy 5 percent rise in global small package volume.

On Oct. 18, Atlanta-based UPS also said it expects "solid" fourth-quarter holiday sales resulting in more package business.

Net income for the quarter ending Sept. 30 increased 8.9 percent, from $1.03 billion compared with $953 million for the same quarter last year. Revenue for the quarter of $11.66 billion increased 10.5 percent from a year earlier . The growth in small package volume translated to 721,000 additional packages each day in the UPS network.

Operating profit for the quarter was reduced by an $87 million pre-tax charge for a tentative legal settlement involving a wage-and-hour case in California. UPS also reported a $52 million reduction in income tax expense. The company said that these two items combined had no effect on earnings per share.

The results marked a significant improvement from the company's second quarter. On July 25, UPS reported results in that period missed expectations and warned of a "moderating" economy, sending its shares 15 percent lower in the day.

The Atlanta-based company is seen as a bellwether of U.S. economic activity, along with main rival Memphis-based FedEx Corp. Analysts said UPS' third-quarter results were a sign that fears of a significant economic slowdown may be unfounded.

All levels of small package service posted gains: UPS said daily ground volume increased 3.6 percent, while average daily volume for its Next Day Air service rose 1.0 percent and deferred air volume climbed 3.4 percent. Total revenue per piece remained firm with a gain of 3.4 percent.

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