The company reported Q1 revenues of $13.43 billion, up from $13.14 billion during the same period of 2012. An operating profit of $1.58 billion was reported, which was virtually identical to operating earnings of $1.57 billion generated during Q1 of 2012. During the quarter, UPS reported a $36 million after-tax gain related to its attempted acquisition of TNT. This amount includes a $213 million after-tax currency gain from liquidating a foreign subsidiary, mostly offset by a $177 million after-tax charge for the termination fee and other transaction-related costs. For the three months ended March 31, UPS generated $1.4 billion in free cash flow after capital expenditures of $453 million. The quarter benefited from a stronger than expected post-holiday season in January as UPS e-commerce solutions resonated with customers.

“UPS demonstrated its ability to consistently deliver results,” said Scott Davis, UPS Chairman and CEO. “The UPS product portfolio is in-tune with connected and empowered consumers, creating a competitive advantage that positions us well for sustained growth.”

For the three months ended March 31, 2013, UPS delivered 16.2 million packages per day, an increase of 4.1 per cent over the prior-year period.

U.S. Domestic Package

During the first quarter, U.S. Domestic revenue increased $267 million to $8.27 billion, and operating profit was up $90 million compared to last year. Operating margin expanded 70 basis points, reflecting the efficiency of the UPS business model. Daily package volume grew 4.4 per cent compared to the same period last year, led by UPS Ground which delivered 531,000 more packages per day, up nearly 5 per cent. Next Day Air® and Deferred products also demonstrated growth, up 1.8 per cent and 3.7 per cent respectively. Total U.S. Domestic revenue per piece was up 0.4 per cent, as base rate improvements were offset by lower fuel surcharges and changes in both customer and product mix. Post-holiday demand in January was very strong, buoyed by B2C growth including adoption of the UPS Returns® portfolio of services. UPS automated and customizable returns services helped businesses gain better control and visibility of their inventories while improving customer satisfaction.

International Package

Daily export volume increased 3.8 per cent, driven by Asia, up about 8 per cent. Europe daily exports grew approximately 3 per cent, while U.S. exports expanded slightly. International revenue was $2.98 billion, essentially unchanged from 2012. Export yield, down 2.5 per cent on a currency neutral basis, continued to be pressured by lighter weight packages and increased reliance on non-premium products. In addition, fuel and currency were a $30 million drag. As a result, adjusted operating profit was $391 million, a decline of $17 million. On a reported basis, the segment recorded operating profit of $352 million, a decline of $56 million compared to the prior year period, reflecting charges related to the attempted acquisition of TNT.

UPS remains focused on growing its global presence and unique capabilities. During the quarter, to better serve the European retail e-commerce market, it launched UPS Access Point® locations in the United Kingdom. By the summer, consumers there will have 1,500 convenient alternatives for receiving UPS home deliveries and dropping off returns.

UPS also significantly expanded its UPS Worldwide Expedited® service, tripling the coverage area to more than 220 countries and territories.

Supply Chain & Freight

Revenue in the segment was up 0.9 per cent to $2.19 billion. Operating profit was $143 million, as the Forwarding business remained under pressure, impacted by overcapacity in the trans-Pacific trade lanes. Both tonnage and yields declined.

UPS Freight increased shipments per day 3.6 per cent, with tonnage up 5.1 per cent and revenue per hundredweight up 1.7 per cent. Industry leading visibility tools and unique service offerings, such as UPS Pickup Notifications for LTL, continue to be well received by customers. The Distribution unit increased revenue about 10 per cent and continued to invest in technology and infrastructure, including new healthcare facilities in North America and Europe. Additionally, UPS announced the acquisition of Cemelog, a medical logistics company serving Eastern and Central Europe. The transaction is expected to close in June. This will add 255,000 square feet of dedicated healthcare distribution space and offer UPS customers expanded access to new patient populations.

“January started strong, benefiting from the post-holiday season. The pace of growth for the remainder of the quarter was in line with our expectations,” said Kurt Kuehn, UPS Chief Financial Officer. “Although macro uncertainty remains, we are reaffirming our 2013 guidance for full year adjusted diluted earnings per share to be within a range of $4.80 to $5.06.” (For 2012, UPS reported adjusted diluted earnings per share of $4.53.)