United Parcel Service jumped the most in two months after the world's largest package- delivery company raised its annual profit forecast and said the US economy will continue to recover.
Profit for 2010 will be as much as $US3.45 a share from a previous maximum of $US3.30, Atlanta-based UPS said today in a statement. Analysts had projected $US3.28 a share, on average, in a Bloomberg survey.
UPS is benefiting from a jump in shipments in Asia and Europe, and said volumes in the US will continue to improve as industrial production outpaces economic growth in the second half. UPS and FedEx Corp. are considered economic bellwethers because they deliver goods ranging from clothing to pharmaceuticals and industrial parts.
"Investors are worried about a double-dip recession, and UPS essentially said today that that isn't going to happen," said Art Hatfield, an analyst at Morgan Keegan & Co in Memphis, Tennessee, who rates the shares "outperform." "UPS said the recovery is going to be slow and uneven, but they didn't say it's going to reverse itself, and that's what everyone has been dying to hear."
UPS climbed $US3.14, or 5.2 per cent, to $US63.15 at 4pm in New York Stock Exchange composite trading, the biggest increase since May 10. The shares have gained 10 per cent this year.
Net Income
Net income jumped 90 per cent to $US845 million, or 84 US cents a share, exceeding the 75-US-cent average of 10 analysts' estimates compiled by Bloomberg. A year earlier, profit was $US445 million, or 44 US cents. Revenue rose 13 per cent to $US12.2 billion.
Domestic shipments will continue to grow roughly in line with US gross domestic product, and exports from Europe and Asia will continue to improve, even if the pace "moderates" somewhat in the second half of this year, executives said.
"Despite the anticipated slow pace of the US recovery and a cautious outlook for Europe, we are confident in our ability to grow the business and improve profits," Chief Financial Officer Kurt Kuehn said in the statement.
UPS said small-package volume in the US rose 1.2 per cent in the second quarter, the best results for that unit in 2 1/2 years, as businesses restocked inventories and consumers bought more goods such as electronics and apparel.
Average price per domestic package jumped 5.8 per cent to $US9 on higher rates and fuel surcharges. The unit accounts for about 60 per cent of UPS's sales.
International shipments surged 20 per cent led by demand in Asia, while prices rose 2.3 per cent to $US18.93, on average.
