UPS Profit Leaps in 'Moderate' Economy

Stronger global demand and daily shipping volume helped UPS boost its profit margin to 8.1 percent from 4.9 percent in the third quarter a year ago.

The transportation giant made across-the-board gains in profit in the three months ending Sept. 30 even as the second-quarter freight surge began to slow.

UPS's net income shot up 80.5 percent in the quarter compared with the same period last year and 17.3 percent from the second quarter to $991 million.

By The Numbers: Air Freight Price Index.

Its overall operating margin was 13.3 percent for the quarter, with its domestic and international package units reporting operating margins of 14 and 15.7 percent.

Consolidated revenue climbed 9.3 percent from the 2009 third quarter and declined about 1 percent from the second quarter to $12.2 billion.

UPS's international and domestic package units both had double-digit operating margins, and its supply chain and freight division reported gains in profit and yield.

"We showed superior results across all segments, and we did this in a moderate economy," Scott Davis, UPS chairman and CEO, told investment analysts Thursday.

"I'm extremely confident we're on our way back to the high levels of profitability we've had in the past," he said.

Its international package business reported strong year-over-year growth, with export volume rising 12.5 percent and overseas domestic shipments 14 percent.

International, including export and domestic business overseas, represents about 15 percent of UPS's package volume and 22 percent of its total revenue.

Domestic U.S. package volume rose 3.6 percent from a year ago on a 3.9 percent increase in ground and 3.2 percent increase in next-day air shipments.

Overall, package volume was up 5 percent from a year ago and 1.1 percent from the second quarter. Total package revenue was just shy of $10 billion.

Domestic package operating profit increased 77 percent from a year ago and 21.8 percent from the second quarter. Sequential volume increased only slightly.

Consolidated average revenue per piece increased 3.7 percent year-over-year and 2 percent from the second quarter, with the strongest annual gain in next-day air.

Less-than-truckload UPS Freight made an undisclosed profit on a 14 percent increase in revenue supported by improved yield and shipment weights.

-- Contact William B. Cassidy at wcassidy@joc.com.