UPS second quarter boosted by international supply chain
28 / 07 / 2015
UPS saw improved operating profit and margin in the second quarter of 2015, led by the International and Supply Chain and Freight segments.
Currency exchange rates and lower fuel surcharges reduced total reported revenue growth, which declined 1.2% from the same quarter last year to $14.1bn.
The US-based global parcels and logistics operator said that pricing initiatives continue to drive base rates higher.
David Abney, UPS chief executive officer, said: “The strong momentum in our International segment is expected to continue and gives us confidence in achieving the upper end of our guidance range.”
Total company shipments increased 2.1% over the second quarter last year to 1.1bn packages, led by US Deferred Air products and International Export shipments.
Currency-adjusted International revenue was up 1.5% over the same period last year. UPS daily export shipments increased 5.5%, primarily due to an 8.5% increase in intra-Europe shipments. The strong dollar drove US imports higher, while US exports were down slightly.
International operating profit increased $81m, or 17% over the adjusted results for the same period in 2014.
Network improvements, volume growth and pricing initiatives all contributed to expanded operating margin and increased profitability. The segment experienced growth from middle-market accounts and improved premium product sales.
Supply Chain & Freight revenue declined 4.5% to $2.2bn, due to forwarding revenue management initiatives, currency and lower fuel surcharges at UPS Freight.
Operating profits improved $31m, or 18% over the adjusted results for the same quarter 2014, driven by gains in Forwarding.
UPS Forwarding operating profit and margin expanded as the business unit continued to implement a “disciplined pricing strategy” across key trade lanes. The unit also benefited from improved market conditions and customer mix. Forwarding tonnage and revenue dropped during the quarter, primarily due to revenue management initiatives and the impact of currency fluctuations.
“The second quarter results reflect continuing gains in our International business,” said Richard Peretz, UPS chief financial officer. “Even though the US economy appears to be growing at a slower pace, our global portfolio and performance reinforces our expectations to attain the higher-end of the guidance range.”