United Parcel ServiceTuesday posted a better-than-expected profit, citing a boost from global markets, plus its supply chain and freight units that offset a slower U.S. small-package market.
"It's a solid but not spectacular quarter," said David Sandell, a portfolio manager at New York-based Leeb Capital Management, which manages assets of $170 million and holds a small position in UPS after selling off most of its shares recently.
"International growth is strong and that's where their future lies."
The world's largest package delivery company reported second-quarter net income of $1.10 billion, or $1.04 a share, compared with $1.06 billion, or 97 cents a share, a year earlier.
Wall Street analysts, on average, had expected earnings per share of $1.03, according to Reuters Estimates.
The Atlanta-based company reported revenue for the quarter of $12.19 billion, up from $11.74 billion in the same quarter in 2006.
Analysts had expected revenue of $12.26 billion.
Revenue from UPS's U.S. small-package business rose to $7.58 billion from $7.46 billion, although average daily package volumes slid to 13.23 million from 13.25 million.
Revenue at the company's international business increased to $2.50 billion from $2.23 billion, with total export volume up 10.4%.
Asia export volume growth jumped 25%, with "particularly strong growth out of China." Europe also posted a double-digit export volume gain, the company said.
"Strong gains in our international package segment offset a lack of growth in the U.S. business," UPS Chief Executive Mike Eskew said in a statement. "We remain confident in the long-term growth prospects that the dynamic global marketplace offers UPS."
UPS said that in the third quarter it expects earnings per share in a range of 99 cents to $1.04.
Chief Financial Officer Scott Davis said in a statement that its U.S. small-package business more closely correlates to U.S. economic trends "and as a result we should see gradual volume growth in our U.S. package business."