UPS Gets a Lift From Weak Dollar

The company also says its full-year growth targets are within reach.
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United Parcel Service

(UPS) - Get Report

reported an increase in second-quarter earnings Tuesday and beat analysts' estimates, as the weak dollar helped the package-shipping company's international results.

The company also provided third-quarter guidance that's in line with analysts' consensus forecast.

Atlanta-based UPS had net income of $692 million, or 61 cents a share, compared with the analyst forecast of 59 cents a share. Last year, the company earned $611 million, or 54 cents a share.

Revenue was $8.23 billion, an increase of 7.1% from last year's $7.68 billion. The company said U.S. package volume increased 1.2%, helped by a 9.1% rise in Next Day Air volume.

Meanwhile, international profitability more than doubled to $158 million. Revenue from the unit was up 19.8% at $1.37 billion.

"The quarter was better than what we expected," said Nathan Lewis, an analyst at Jackson Securities, who added that the company continues to see strength in international business, while its nonpackage and air businesses are doing well, too. "We're seeing better efficiencies in the international marketplace. Asia is trending positively and is doing extremely well." Jackson Securities has no banking relationship with UPS.

In the company's U.S. domestic segment, revenue rose 3.7% to $6.12 billion, but domestic operating profit fell 7.5% to $832 million. UPS cited increases in health care and pension costs.

In the third quarter, the company expects to earn 58 cents to 62 cents a share, with the analysts' estimate at 60 cents a share. UPS said the expected results are on track with its full-year profit growth outlook of 10% to 15%. Analysts currently expect earnings of $2.38 for the year. UPS earned $2.14 a share in 2002.

Also in the third quarter, the company expects to see volume growth of 2% to 3% in its U.S. segment.

Shares of UPS closed at $64.79 Monday on the

New York Stock Exchange

.