(Reuters) -United Parcel Service Inc on Tuesday posted record quarterly profit and revenue on pandemic-fueled demand for doorstep deliveries and air transportation.
Shares in the world’s biggest package delivery firm soared 12.1% to $197.07 in early trading, after operating profit swelled during the first quarter, when severe winter weather briefly disrupted operations.
“The company crushed our more conservative estimates, as operating leverage in the domestic segment – the key controversy
on the stock – was very strong,” Bernstein analyst David Vernon wrote in a client note.
Business is booming at UPS and rivals like FedEx Corp, DHL and Amazon.com Inc since the pandemic shifted purchases of everything from food to furniture online.
UPS, like FedEx, is a U.S. government partner in delivering COVID-19 vaccines. UPS opened a command center to track vaccine shipments, and contributions from that premium business bolstered profits during the quarter, Chief Executive Carol Tomé said on a conference call.
Tomé, CEO since June 1, has been wringing out costs and the benefits are bearing fruit.
Adjusted operating profit in the company’s core U.S. domestic unit swelled more than 273%. International operating profit, bolstered by high-margin air shipments, was up almost 97%.
Total revenue rose 27% to $22.9 billion, beating estimates of $20.49 billion, according to Refinitiv data.
The company earned a better-than-expected $2.77 per share – excluding a $2.5 billion boost from the American Rescue Plan Act of 2021 (ARPA), which was signed into law during the quarter. The law frees up cash by limiting the need to make pension contributions over the medium term. UPS said ARPA reduced its pension liability by $6.4 billion overall.
UPS executives said they had no plans to repurchase shares and put off dividend discussions until the company’s investor meeting in June.
(Reporting by Sanjana Shivdas in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Amy Caren Daniel and Marguerita Choy)