* First-quarter EPS $1.04 vs est $1.01
* Revenue $13.43 bln vs est $13.46 bln
* U.S. daily package volume rises 4.4 pct
* To buy Hungarian pharmaceutical logistics company
* Shares up 2.7 percent
By Sagarika Jaisinghani
April 25 United Parcel Service Inc, the
world's No. 1 package delivery company, said its international
package business will drive results in the near term and that it
expects the small-package market to grow faster than the U.S.
economy in 2013.
UPS shares were up 2.7 percent in afternoon trading on
Thursday after the company reported a higher quarterly profit on
strong post-holiday season sales and increased business from
The company, which like rival FedEx Corp is viewed
as an economic bellwether because of the volume of goods it
handles, said it expects international shipments of packages
weighing up to 40 kg (88 pounds) to boost profit in the second
UPS gets about 20 percent of its business from international
"The first quarter was particularly challenging for
(international) ... but we feel that the business is prospering
and global trade, especially within Europe and Asia, will
continue to grow," Chief Financial Officer Kurt Kuehn told
Reuters. "So that's probably the area that we'll see the most
improvement year over year (in the second quarter)."
However, UPS said it expects shipments of heavier goods --
most of which form a part of the supply chain service it offers
businesses -- to remain subdued through 2013.
UPS is coming off a particularly difficult year, when
customers cut back on air courier services.
But as consumers shift from air express to cheaper but
slower modes of shipping, UPS's stronger North American domestic
ground network puts it in a better position than FedEx, which
focuses more on international air shipments.
FedEx cut its full-year forecast last month after a
lower-than-expected quarterly profit and said it would step-up
restructuring efforts and cut capacity in Asia.
UPS said deliveries for online retailers played a big part in
its better-than-expected quarterly profit.
"Increased focus by traditional retailers on using their
brick-and-mortar locations as distribution sites is creating
more pickups at retail locations for ultimate residential
delivery," Kuehn said on a post-earnings conference call.
The company's daily package volume in the United States
increased 4.4 percent in the first quarter, led by UPS Ground,
which delivered 531,000 more packages per day.
"E-commerce has a greater-than-one-shipment-per-purchase
benefit because (UPS) puts a few things in the same box, (and)
sometimes things are returned using UPS as well," Morningstar
Inc analyst Keith Schoonmaker said.
JUMP ON FEDEX
The company also got a jump start of more than a year over
its rival on a service to let customers select from a range of
options to schedule dates, locations and times of delivery.
FedEx only introduced the service on Tuesday.
UPS's international package revenue was flat in the quarter
ended March 31, while sales in the United States rose 3.4
percent. Total revenue rose 2.2 percent to $13.43 billion.
Net income rose to $1.04 billion, or $1.08 per share, from
$970 million, or $1 per share, a year earlier.
Excluding items, UPS earned $1.04 per share.
Analysts on average had expected earnings of $1.01 per
share, excluding items, on revenue of $13.46 billion, according
to Thomson Reuters I/B/E/S.
The company reaffirmed its full-year earnings forecast of
$4.80-$5.06 per share.
UPS also said on Thursday it would buy Hungarian
pharmaceutical logistics company, CEMELOG Zrt, to strengthen its
healthcare reach in Europe. Terms were not disclosed.
"The emerging markets' business-to-consumer (offering) and
industry specific solutions like healthcare have enormous
potential and UPS continues to invest in them," Chief Executive
Scott Davis said.
S&P Capital IQ analyst Jim Corridore, who raised his price
target on UPS shares to $100 from $94, said he expected similar
deals after UPS's unsuccessful plan to buy Dutch delivery firm
TNT Express for about $7 billion.
UPS dropped plans to buy TNT in January after European
regulators said they would veto the deal on antitrust concerns.
UPS shares were up 2.7 percent at $85.79 in afternoon
trading on the New York Stock Exchange. The shares had gained
more than 5 percent in the 12 months to Wednesday's close but
underperformed the S&P 500 index, which rose 15 percent.