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Home » UPS "encouraged" by signs of economic recovery
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UPS "encouraged" by signs of economic recovery

October 26, 2009
Mark B. Solomon
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UPS Inc., the nation's largest transportation company, posted third-quarter results Oct. 22 that met or modestly exceeded analyst consensus estimates. In addition, top UPS executives, for the first time in months, expressed optimism over the outlook for the economy and demand trends for the company.

The Atlanta-based company reported an operating profit of $929 million on revenue of $11.15 billion, well below the results in 2008's third quarter. But its earnings per share of 55 cents came in above Wall Street's consensus of 52 cents per share and at the high end of UPS's own estimates.

"I'm encouraged by the signs of economic recovery that are becoming apparent, although we still have a long way to go," Scott Davis, UPS's chairman and CEO, said in a statement. CFO Kurt Kuehn added that while the third quarter began the same way the weak second quarter ended, the company saw "profitability improvement due to effective cost management and firming volume later in the quarter."

Analysts at JPMorgan Chase lauded UPS's focus on cost control, noting the company's 2009 capital spending of $1.7 billion is well below an original 2009 budget of $2.2 billion and below the $2.6 billion to $3 billion spent annually in the past three years. JPM analysts noted an improvement in UPS's domestic air volumes but pointed to weakness in its core domestic ground parcel business.

Analysts at Milwaukee-based Robert W. Baird noted improvement in international volumes, which rose 4 percent from year-ago levels. Baird analysts also noted the continued weakness in UPS's domestic ground volumes, but said ground volumes exhibited "modest seasonality" through the quarter. The seasonal improvements became more pronounced toward the end of the quarter, according to the Baird analysts.

Air Trucking Parcel & Postal Carriers
KEYWORDS UPS
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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