UPS reports strong all-round growth

UPS reported first-quarter net income up 2.4% y-o-y to $1.16 billion as revenue increased 6.2% to $15.32 billion. Operating profit for the quarter, however, was down 2.1% to $1.78 billion as fuel surcharge revenue lagged a big increase in fuel expense.

In recent years, the quarterly reports from the world’s big express companies have often included significant one-time costs or benefits, and the as-reported and as-adjusted financial numbers can be vastly different. This time, however, other than a relatively modest negative foreign exchange impact, UPS’ reported financial data paints a fairly straightforward picture.

On the operational side, there was nothing but good news. As shown in the chart at right, average daily package volumes rose for all of the company’s products, with the growth particularly strong in the International Package segment.

Commenting on the quarter, UPS said: “Revenue grew in all segments and in all major product categories, as balanced market demand occurred across the company’s broad product portfolio.”

Looking at the results on a segment-by-segment basis:

The 59 production 767-300Fs in the UPS fleet will soon be joined by freighter-converted units.

In addition to the strong financial and operational performance, UPS’ first quarter was also noteworthy for the change it signaled for the company’s fleet. Over the past few years, while the freighter fleets of FedEx, DHL, TNT, SF, and YTO have been undergoing rapid change, UPS has operated the same 237 jet aircraft. The first sign of change came in late October last year, when the company placed an order with Boeing for fourteen 747-8Fs. And while there was nothing said about it in the quarterly report, the change is continuing. Late in the quarter UPS acquired a 767-300ER from Japan Airlines. Cargo Facts believes this is the first of many such acquisitions as UPS adds capacity in the form of freighter-converted 767-300BCFs. For more on that, see our report “UPS goes for 767 conversions“.

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