UPS Reports Strong Second-Quarter Profits, But Outlook Disappoints

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UPS Inc. reported July 25 a 7.6 percent increase in second-quarter profit on strong sales.

But the results fell short of Wall Street expectations, and the company warned that its full-year earnings growth would be at the low end of its original forecast.

The Atlanta-based company said it earned $1.06 billion for the three months that ended June 30, compared with a profit of $986 million for the same period a year ago.

Revenue in the quarter rose 15.2 percent to $11.74 billion, up from $10.19 billion a year earlier.

All levels of service posted gains. Total international package volume grew 16.5 percent, UPS said, even though there were three fewer operating days in Europe than in the same quarter last year.

Deferred air volume, climbed 7.6 percent. Daily ground volume increased 4.6 percent, while average daily volume for Next Day Air rose 4.2 percent. Total revenue-per-piece remained firm with a gain of 2.7 percent.

During the second quarter, UPS announced a $1 billion expansion of its Worldport hub in Louisville, KY. The 1.1 million square-foot expansion will increase sorting capacity by 60 percent to 487,000 packages per hour. This five-year expansion plan reflects excellent growth projections in UPS's air package volume around the world, UPS said.

For the first six months of the year, UPS (www.ups.com) earned $2.04 billion, compared to a profit of $1.87 billion for the same period a year ago. Six-month revenue rose 15.8 percent to $23.26 billion from $20.08 billion a year earlier.

The company said it expects diluted earnings per share in a range of 87 cents to 91 cents in the third quarter, compared to the 86 cents reported during the prior-year period. UPS said the third quarter had fewer operating days than the prior-year period, negatively impacting earnings per share comparison approximately 4 to 5 cents share

The company also said that it expects full-year earnings growth to be at the low end of the company's original estimate of 11 percent to 16 percent growth for 2006.

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