United Parcel Service Inc.’s first-quarter profit exceeded analysts’ expectations, helped by a strong supply of US packages.
Earnings excluding certain items increased to $1.27 a share, compared with the $1.22 average of analyst estimates compiled by Bloomberg. Revenue rose to $14.4 billion, the Atlanta-based company said in a statement Thursday. Analysts had predicted $14.6 billion.
UPS had fewer disruptions to its air and road network in the first quarter than in previous years that were plagued with costly storms. The company also has been partly insulated from a slowdown in US freight volume because of a growing reliance on ecommerce, said Kevin Sterling, an analyst at BB&T Capital Markets.
US domestic operating margin expanded on solid revenue growth and reduced per unit costs from productivity gains, UPS said.
Revenue increased 3.1 per cent for US domestic packages. Sales fell 1.9 per cent for international shipments, but were flat after excluding currency effects.
UPS fared well during the peak holiday season in November and December, delivering its crush of packages ahead of Christmas. Chief rival FedEx Corp. was criticized for failing to beat the holiday deadline in some instances.
With the busiest season passed, UPS investors probably will focus on the potential risks posed by Amazon.com Inc., which has been moving toward creating its own distribution network, said Ben Hartford, an analyst at Robert W. Baird & Co.
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