UPS Profits Up; Revenues Down

UPS said it had a big jump in second-quarter income over depressed earnings a year ago, but lower revenues because of softness in the U.S. economy, currency challenges overseas and lower fuel surcharges.

The Atlanta package-deliverer, often viewed as a bellwether of the economy, said its net income was $1.2 billion, a 171 percent increase over the year-earlier quarter. The 2014 quarter was depressed by a $665 million charge tied to retiree health-care benefits. Without that impact, UPS said its earnings per share last quarter would have shown a 12 percent increase over the 2014 quarter, to $1.35.

UPS’s second-quarter revenue fell 1.2 percent, to $14.1 billion. The biggest decline was in UPS’s international package delivery business because of a stronger dollar this year, which dampened its export shipments and reduced the value of overseas revenues in dollar terms. Revenues were also reduced because UPS charged customers smaller fuel surcharges due to the drop this year in crude oil and fuel prices.

UPS’s domestic delivery business, with $8.8 billion in revenues, was up 1.6 percent compared to a year ago.

UPS Chief Executive David Abney said the company has seen “soft patches” in some parts of the U.S. economy, including retail sales.

“Recent economic news has been mixed and it has just caused us to be cautious,” he said.

Still, he and other UPS executives said they see improvements in all parts of the company’s business and expect the current quarter’s results to be strong.

“During the quarter, UPS continued to invest for the future by expanding capacity and launching new capabilities that provide higher value to customers,” said Abney. “The strong momentum in our international segment is expected to continue and gives us confidence in achieving the upper end of our (third-quarter earnings) guidance range.”