While all segments of the company grew their revenue, in one, Supply Chain and Freight, operating profits fell by $34 million although income was up 53.9% to $1.9 billion, due mostly to acquisitions. UPS notes that increased expenses and lost revenue is ascribable to the integration of the former Menlo Worldwide Forwarding into the unit. Increases in less-than-truckload revenues and shipment growth for ground freight helped moderate the loss.
Consistent with overall industry trends, UPS International Package revenue was $2.16 billion, up 17.3% year over year. For this unit, profits grew 13.5% to $395 million with an operating margin of 18.3%. International volume grew to 1.7 million packages per day, an increase of 29.1%.
There was volume growth in exports, which were up 16.3, a performance trend shared by all major regions of the world. Acquisitions played a part in boosting non-U.S. domestic volume by 38.3%. The company has expanded operations in China and added international flights to and from that country.
U.S. Package revenues were $7.5 billion, a climb of 9.6%. For this company unit, operating profits were up 12.3%, to $1.6 billion. Net income was up 10.5% to $875 million.
Mike Eskew, UPS chairman and CEO, noted, “This was a quarter of outstanding growth that resulted in strong returns and excellent cash flow. To drive future results, we will continue to invest in our network, technology and products to bring even more value to the customer.”