International deliveries seen boosting UPS in near term

Thu Apr 25, 2013 1:59pm EDT
 
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By Sagarika Jaisinghani

(Reuters) - United Parcel Service Inc (UPS.N: Quote), 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 online retailers.

The company, which like rival FedEx Corp (FDX.N: Quote) 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 quarter.

UPS gets about 20 percent of its business from international deliveries.

"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.   Continued...

 
A United Parcel Service (UPS) logo is seen on a car in center of Warsaw January 16, 2013. REUTERS/Kacper Pempel