UPS increases Q2 earnings despite lower revenues

United Parcel Service Inc. grew its net income 9.9 percent in the second quarter despite revenues at the package delivery and logistics company falling 1.2 percent compared to the same period in 2014.    United Parcel Service Inc. increased its net income 9.9 percent to $1.23 billion in the second quarter of 2015 compared with the second quarter of 2014. UPS earnings per share likewise increased from $1.21 per share to $1.35 per share in the second quarter, according to the company’s most recent financial statements.
   Revenues at the package delivery and logistics service provider, however, fell 1.2 percent to 14.1 billion for the quarter.
   UPS attributed the decline in revenues primarily to a currency exchange rates, a strong U.S. dollar, and lower fuel surcharge revenues, which were offset slightly by pricing initiatives that increased base rates.
   Total shipment volumes for the quarter increased 2.1 percent to 1.1 billion packages compared to the second quarter of 2014, led by the U.S. Deferred Air products and International Export shipments business segments.
   UPS’s Domestic package unit reported $8.8 billion in revenues in Q2 2015, a 1.6 percent increase from Q2 2014, led by 15 percent shipment growth in Deferred Air products and 8 percent growth in UPS SurePost. Total daily deliveries were up grew 1.8 percent “due to a slower pace of B2C (business-to-consumer) growth,” UPS said.
   Adjusted for foreign currency exchange rates, revenues for the company’s International Package segment grew 1.5 percent to $3.05 billion compared to the same period last year. Daily export shipments were up 5.5 percent, primarily due to an 8.5 percent increase in intra-Europe shipments.
   UPS reported revenues of $2.2 billion in its Supply Chain & Freight segment, down 4.5 percent from second quarter 2014. The company attributed the decline primarily to revenue management initiatives in its Forwarding unit, currency exchange rates and lower fuel surcharges at UPS Freight.
   “During the quarter, UPS continued to invest for the future by expanding capacity and launching new capabilities that provide higher value to customers,” David Abney, UPS chief executive officer, said of the results. “The strong momentum in our International segment is expected to continue and gives us confidence in achieving the upper end of our guidance range.”
   Looking forward to the remainder of 2015, UPS said it expects full-year 2015 EPS of $5.05 per share to $5.30 per share, a 6 percent to 12 percent increase from 2014 and unchanged from its last earnings report in April.
   “The second quarter results reflect continuing gains in our International business,” said CFO Richard Peretz. “Even though the U.S. 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.”