UPS profit nearly doubles in second quarter

The results were “achieved despite the fact that mixed economic signals continue to dominate the headlines,” Scott Davis, UPS’s chief executive, told analysts Thursday.

The Sandy Springs-based shipping giant said it expects the improved profits to continue, and the company boosted its annual forecast.

In the quarter ended June 30, UPS posted a net profit $845 million, or 84 cents a share, compared to $445 million or 44 cents a year ago.

Revenue rose 12.7 percent to $12.2 billion. UPS credited shipping growth in countries like Turkey and Canada, European nations, and new alliances in Malaysia and Vietnam.

UPS said profit from international shipping in the first six months of the year was its best ever. Customers also are returning to premium air service from cheaper ground shipments, the company said.

Average daily package volume rose 3.6 percent overall in the quarter, but international growth was sharply higher at 20.1 percent while U.S. daily volume rose 1.2 percent.

“Technology has been the biggest driver”  of shipping demand, UPS's chief financial officer, Kurt Kuehn, told The Atlanta Journal-Constitution. “We do think corporations with good balance sheets right now are updating technology equipment. And on the business-to-consumer side, there’s all the new technology such as smart phones that are stimulating consumer demand.”

Doug Caldwell, president of Parcel Research, a Portland, Ore.,-based shipping consultancy, said UPS and FedEx have had several quarters of good financial results.

“If UPS and FedEx are a bellwether [for the economy], it’s looking fairly good," he said. "There appears to be some confidence among shippers that they didn’t have a year ago.”

Revenue per package rose 7 percent, UPS said, reflecting price and fuel surcharge hikes, along with heavier average shipping weight.

Davis also credited the company's U.S. reorganization as contributing to the results.

UPS increased its guidance for 2010 adjusted earnings to a range of $3.35 to $3.45 per share, a 45-50 percent increase over last year.

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