Menlo boosts UPS’s revenue, not profits
UPS boosted its revenue 11 percent to $9.9 billion in the first quarter following its takeover of Menlo Worldwide Forwarding, but the newly acquired forwarder played no part in increasing the giant express parcel operator’s net income, which rose 16 percent to $882 million.
Revenue from supply chain services soared 86 percent to $1.2 billion in the latest quarter, from $664 million a year earlier. Freight services and logistics accounted for $1.12 billion of the latest quarter’s revenue figure.
International package revenue climbed 13 percent to $1.8 billion, while UPS’s core U.S. domestic package business saw its revenue go up 3 percent to $6.8 billion.
Group operating profit rose 14 percent to $1.4 billion in the latest quarter from $1.2 in the first quarter of 2004. Operating profit for the supply chain solutions segment, though, declined 68 percent to $9 million due to integration costs from the December acquisition of Menlo Worldwide Forwarding.
“The former Menlo unit now is a key part of an aggressive push by UPS Supply Chain Solutions into the time-definite heavy air freight business,” UPS said.
Our cost initiatives are taking hold and we are benefiting from the deployment of package flow technology in the U.S. operation. There is strong momentum throughout all three business units,” said Scott Davis, UPS’s chief financial officer.
Davis said the company expects solid growth in 2005. The international segment should see “strong export volume growth,” while the Menlo acquisition is expected to produce a slight profit for the year.