E-Commerce Helps UPS Post Record Q1 Earnings

FRAMINGHAM (04/24/2000) - Atlanta-based United Parcel Service of America Inc. posted record profits for this year's first quarter, thanks in large part to its ventures into the e-commerce arena.

The company said its first-quarter profit was $813 million, or 67 cents per share, including one-time gains from venture fund investments and the sale of a truck-leasing unit. Even without those nonrecurring items, UPS said, its net operating income rose 35.1 percent to $674 million, or 56 cents per share, up from $499 million, or 44 cents per share, a year earlier.

A consensus of analysts at First Call/Thomson Financial had predicted that UPS would earn just 52 cents per share in the period.

UPS said its nonpackage segment, which includes the UPS Logistics Group and other subsidiaries pursuing new strategic initiatives such as e-commerce, reported the largest percentage gains, with revenue climbing 65.6 percent to $356 million.

On the logistics front, the company said, it scored big in the e-commerce market by winning a contract from Ford Motor Co. to manage the automaker's new vehicle delivery network (see story). In addition, last Thursday UPS announced that its logistics unit had reached an agreement to manage Compaq Computer Corp.'s service-parts network in North America.

And the UPS Logistics Group Europe sealed an important e-commerce venture with Alcatel Business Systems and Walkyries to offer mobile telephones to online customers.

But David Campbell, an analyst at Branch, Cabell Co. in Richmond, Virginia, said it's a little hard to see the effect of e-commerce on the company's revenue growth.

"The nonpackage revenue grew modestly, but that doesn't make a lot of money," Campbell said. "The growth (in this area) is really not any better than it was last year, but it is growth. It didn't grow at all from 1996 to 1998."

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