ATLANTA: United Parcel Service reported an operating profit of US$1.5 billion for the first quarter of 2014, down $106 million from the prior-year's adjusted results, and included an after-tax gain of $36 million relating to its failed attempt to buy TNT Express.
The company said it generated US$1.9 billion in free cash flow, paid US$596 million in dividends, and repurchased 6.8 million shares for approximately US$660 million during the period.
The company cited "unusually harsh weather" for a US$200 million impact caused by increased expenses and slower revenue growth.
"Much of the U.S. economy was negatively affected by the severe weather conditions in the first quarter, resulting in lower UPS operating results versus the prior year," said Scott Davis, UPS chairman and CEO. "International and the supply chain and freight segment benefitted from positive momentum during the quarter as customers utilized the strategic investments made by UPS to strengthen our portfolio."
UPS said average daily shipments in the U.S. rose 4.2 percent in the quarter because large e-commerce shippers opted for the company's lightweight deferred shipping services. Domestic revenue increased 2.6 percent over the prior-year period to US$8.5 billion and generated US$927 million in operating profit, down US$158 million due to the weather. The company said revenue per package dropped 1.5 percent from the previous year due to changes in customer and product mix, as well as lower fuel surcharges.
International business rose 5.0 percent to produce an operating profit of US$438 million, 12 percent higher than the prior-year. Export shipments climbed 7.7 percent overall driven by a 15 percent growth in Europe and "modest" gains in Asia and the Americas. The company noted that European transborder shipments continued to expand rapidly during the period.
The UPS supply chain and freight segments increased their operating profit 3.5 percent to US$148 million and boosted the operating margin by 6.8 percent. Kurt Kuehn, UPS CFO commented: "We are encouraged by the positive trends in our business and expect the remainder of the year to perform as we originally guided."