Rising revenue boosts UPS profit; 2016 forecast confirmed

Fri Jul 29, 2016 11:05am EDT
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By Nick Carey

CHICAGO (Reuters) - United Parcel Service Inc (UPS.N: Quote) reported a higher quarterly net profit on Friday that met analyst expectations as revenue grew across its business units, and the company reaffirmed its full-year earnings outlook despite global economic uncertainty.

Chief Executive David Abney told Reuters UPS is adding capacity to its network and will work more closely with retailers ahead of this year's crucial holiday peak season.

The company had put in a solid a performance during the 2015 peak season after two years of struggling to handle holiday demand and the costs associated with it.

"We think it's going to be a repeat of last year," Abney said. "We just have more tools in our toolbox this year."

Often seen as a bellwether of U.S. economic activity, UPS revenue at its core U.S. domestic package business rose 2.4 percent on the year to just over $9 billion. Lower fuel costs and technology improvements helped UPS cut costs by 0.2 percent per package in the second quarter.

Like other package delivery companies, UPS has benefited from a rapid rise in ecommerce, but has also struggled to bring down the extra costs associated with making stops at individual residential addresses rather than at businesses.

UPS, a long-standing proponent of free trade, reiterated concerns over anti-trade rhetoric in this year's U.S. presidential election, arguing that U.S. businesses benefit from trade deals.

"It's not big companies that benefit; small and medium-sized enterprises need to compete and trade deals can make all the difference in the world to them," Abney told Reuters.   Continued...

An airplane is seen on the tarmac at the United Parcel Service (UPS) Regional Air Hub in Rockford, Illinois, December 9, 2014. Picture taken December 9, 2014. REUTERS/Jim Young