Chindia drive UPS Asia growth

Asia - UPS reported double digit growth in Asia in the first quarter, on strong volume from China and India, but lowers its outlook on the full year in light of a slowing US economy.

UPS said global revenue growth grew on double-digit gains in both the international package and supply chain and freight operations.

It reported a 15% growth in Asia, driven by increased volumes in China and India, as well as constant momentum across other markets.

"UPS in Asia is performing well with double digit growth in the first quarter," said Derek Woodward, president of UPS Asia Pacific.

For the three months ended 31 March, global consolidated revenue rose 6.5% to US$12.7 billion while consolidated average daily volume remained flat at 15.1 million packages per day.

Supply chain and freight revenue rose nearly 11%, the company said. Forwarding and logistics revenue grew 12.8%, driven by the new air freight portfolio launched in January. However, freight revenue grew 4.1%, constrained by the slowing US economy, UPS said.

The company said it recognised a tightening US economy will negatively impact the business.

"In light of the difficult US economic environment we will be extremely vigilant with respect to costs and will not lose our focus on growing the business," said Scott Davis, UPS chairman and CEO. "We will continue to invest in the infrastructure, new products and services that will enable our customers to succeed in the global marketplace."

"We believe that in an environment of economic uncertainty, it is even more critical today for companies to operate efficiently and better manager their supply chain for greater competitive advantage," Woodward said, adding that the company's current network and technology has put the company in a good position to tackle the downturn.

The slowing US economy not only reduced average daily volume in the US by 0.3% for the quarter but also contributed to a shift away from premium products, the company said. Volume declined 3.8% for the company's Next Day Air and 2.9% for Deferred services.

These volume decreases, a shifting away from premium products and increased fuel costs during the quarter contributed to the declines in operating profit and margin, the company said.

"We see no signs of economic strengthening in the second quarter," said Kurt Kuehn, UPS CFO Kurt Kuehn. "As a result, the company expects earnings for the quarter in a range of US$0.97 to US$1.04 per diluted share compared to US$1.04 for the second quarter of 2007."