Mumbai : UPS  today announced diluted earnings per share of $0.88 for the first quarter of 2011, a 24% improvement over the adjusted $0.71 for the prior-year period.  Global revenue grew 7.3%, producing a 21% increase in operating profit to $1.4 billion.

On a reported basis, diluted earnings per share and operating profit increased 66% and 37%, respectively, over the same period last year.

“UPS produced strong first quarter results despite rapidly rising fuel costs and challenging weather conditions,” said Scott Davis, UPS chairman and CEO.  “Once again we demonstrated the strength of our global portfolio and ability of our integrated operating model to further expand margins.”

Based on the company’s performance, UPS has increased its guidance for 2011 diluted earnings per share to a range of $4.15-to-$4.40, an increase of 17-to-24% over 2010 adjusted results.

Adjusted

Consolidated Results 1Q 2011 1Q 2010 1Q 2010

Revenue                                  $12.58 B       $11.73 B

Operating profit                         $1.43 B         $1.04 B          $1.18 B

Operating margin                        11.3 %             8.9 %          10.0 %               

Average volume per day           15.0 M           14.9 M

Diluted earnings per share         $0.88            $0.53             $0.71

For the three months ended March 31, 2011, UPS delivered 957 million packages and expanded its operating margin by 130 basis points to 11.3%.  On a reported basis, operating margin improved 240 basis points over the prior-year period.

In the first quarter of 2010, UPS incurred $175 million in charges that reduced diluted earnings per share by $0.18.  Those charges related to the U.S. domestic segment reorganization, a loss on the sale of a supply chain unit and a change in the tax filing status of a German subsidiary.

Asia Positioned for Growth

In Asia Pacific, first quarter export volume growth was led by Vietnam and South Korea with growth exceeding 50% and nearly 30% respectively, while China experienced more than 10% growth.

“UPS witnessed strong growth in Asia Pacific as a result of our industry leading logistics capabilities and the exceptional value we create for our customers. This is despite the rising fuel prices, adverse global weather conditions and the unfortunate situation in Japan.” said Derek Woodward, President of UPS Asia Pacific Region, “We continued to invest in capacity and improved network connectivity as we focus on growth in 2011.”

During the quarter, new direct flights were launched between Hong Kong and Cologne, Germany, expanding capacity and enabling the company to offer the widest guaranteed next-day delivery coverage for both packages and heavy freight between Hong Kong and major European cities.

New routes were also established from Japan to Taipei and China, while UPS upsized its capacity serving the high-volume South Korea – U.S. trade lane with the addition of a 767 flying in-and-out of Inchon.

UPS also expanded its preferred Less-than Container Load Ocean Freight service in Asia, following a successful pilot in Japan in 2010. More customers can now benefit from this unique expedited service that shortens Ocean Freight delivery times to the U.S. by up to 40 percent.

Recently, UPS was recognized as the “World’s Most Admired” company in its industry by FORTUNE magazine.  The company was cited for its outstanding reputation, quality of products and services, superior innovation, long-term investment value and quality of management.  In addition, the Reputation Institute polled nearly 33,000 consumers to measure perceptions of trust, esteem and admiration of large U.S. companies.  UPS ranked sixth overall and first in the transportation industry.

Cash Position

UPS generated $900 million in free cash flow during the quarter, even after making accelerated pension contributions of $1.2 billion.  Capital expenditures for the period were $400 million.

Distributions to shareowners during the quarter increased as UPS paid dividends totaling $500 million, up 10.6% per share.  The company also repurchased 6.8 million shares for approximately $500 million.

Adjusted

U.S. Domestic Package 1Q 2011 1Q 2010 1Q 2010

Revenue                                               $7.54 B          $7.10 B

Operating profit                                 $849 M           $562 M         $660 M          

Operating margin                              11.3 %              7.9 %          9.3 %

Average volume per day                12.67 M          12.73 M

Operating profit jumped 29% on an adjusted basis with revenue growth of 6.2%.  On a reported basis, operating profit increased 51%.  Operating margin expanded 200 basis points to 11.3% due to higher yields and operational efficiencies.  On a reported basis, margin expanded by 340 basis points.

Premium product growth outpaced ground as UPS Next Day Air® package volume grew at a mid-single digit rate.  Revenue per piece for the segment improved 5%, primarily driven by increases in base rates and higher fuel surcharges.

Earlier this month UPS proudly hosted President Barack Obama at its Landover, Md., facility.  The visit included a close-up look at our “rolling laboratory” of alternative fuel vehicles and best-in-class technologies that make UPS so efficient.  This “green fleet” recently celebrated a milestone of having driven a combined 200 million miles since 2000.

International Package 1Q 2011 1Q 2010

Revenue                                            $2.90 B                        $2.64 B

Operating profit                                  $446 M                         $427 M

Operating margin                                15.4 %                          16.2 %

Average volume per day                   2.29 M                          2.20 M

Operating profit for the segment improved to $446 million on 10% revenue growth.  Revenue per piece climbed 3.8% as the gains from rate increases, higher fuel surcharges and product mix were offset somewhat by currency.

Export average daily volume increased 7.2%, continuing to outperform the market.  Europe led the way with strong export volume growth that was balanced to all regions of the world.

Adjusted

Supply Chain & Freight 1Q 2011 1Q 2010 1Q 2010

Revenue                                    $2.14 B        $1.99 B                              Operating profit                          $131 M                  $53 M            $91 M                    

Operating margin                          6.1 %             2.7 %             4.6 %

Operating profit soared 44% on an adjusted basis with revenue growth of 7.6%.  On a reported basis, operating profit increased 147%.  The operating margin for the segment increased to 6.1% driven primarily by improvements in the Forwarding business unit and UPS Freight.

Forwarding experienced margin expansion over last year due to revenue management initiatives and lower purchased transportation.

UPS Freight revenue was up almost 23% over the prior-year period.  The business unit saw strong increases in LTL revenue per hundredweight and gross weight hauled.

The company announced expansion of UPS Express Freight to Israel and Slovakia in February.  These two emerging markets are quickly becoming key hubs for the high-tech, automotive and other manufacturing industries.