UPS profit jumps as volumes rise

United Parcel Service (UPS) said that the broad economic recovery appears poised to gain steam, although the package-delivery giant described the upturn as more "measured" than dramatic to this point, the Wall Street Journal reported.

UPS said profit for the quarter came in at US$533 million, or 53 cents a share, up from $401 million, or 40 cents a share, a year earlier. Excluding restructuring and write-down charges, earnings rose to 71 cents from 52 cents as revenue grew 7.2 percent to $11.73 billion.

Chief executive Scott Davis said that demand picked up throughout the first quarter, a trend that has continued so far in the second quarter.

"Economies around the world are showing signs of recovery," Davis said.

In the US, he said he expects growth in industrial production to finish 2010 above four percent compared with an estimated 2.4 percent growth rate in the first quarter.

Meanwhile, Davis said UPS hasn't fully calculated the financial impact from the recent volcanic eruption in Iceland, which shut down European aviation for several days this month. But he said the financial hit to UPS likely won't be large.

"We think it's somewhat immaterial," Davis said, although he cautioned that it's "too early to tell" the precise impact.

UPS's main European hub in Cologne, Germany – along with airports throughout much of Northern and Central Europe – was closed because of the dangerous ash cloud spewed by the volcanic eruption.

The Cologne airport re-opened April 21, and UPS was able to operate out of it "at very high peak volumes," chief financial officer Kurt Kuehn said, clearing its backlog in packages.

"We have pretty much caught up at this point," Kuehn said.

(Source: Cargo News Asia)