ATLANTA -- UPS' second-quarter revenue improved on solid performances from its domestic and international package divisions. Its earnings edged up. The company reaffirmed its earnings guidance for the full year.
The package and delivery service's revenue increased to $14.63 billion from $14.1 billion a year ago. Analysts surveyed by Zacks Investment Research expected $14.6 billion in revenue.
While UPS had a solid quarter, some investors may have expected an increase to its full-year forecast, said Stephens Inc. analyst Jack Atkins. UPS reaffirmed its full-year outlook for profit of $5.70 to $5.90 a share and cited softer export demand as a potential hurdle for the second half. Analysts polled by FactSet predict $5.80 per share. Analysts are also asking how much profit margins will be hurt when currency hedges expire, Atkins said.
UPS said potential risks from a weak global economy are presenting "head winds" as the carrier enters the second half.
The outlook for global economic growth has been downgraded even as U.S. consumer spending remains healthy, Chief Executive Officer David Abney said in a call with analysts after the Atlanta-based company reported second-quarter results.
"Delayed inventory drawdowns and soft export demand likely will remain head winds in the latter part of 2016," he said Friday.
The world's largest package-delivery company is contending with sluggish global economic growth and uncertainty raised by the United Kingdom's vote to leave the European Union. UPS has a sunnier view in the U.S., where rising online purchases are increasing demand for shipping services.
Revenue for the U.S. domestic package unit climbed 4 percent, with average daily package volume up 2.5 percent. For the international package division, revenue rose 1.1 percent, and daily export packages climbed 3.9 percent.
The effects on Europe's economic growth of the British vote to exit the EU are a "slight concern," William Blair & Co. analyst Nate Brochmann wrote in a July 13 research note. However, growth in online shopping on the continent should help offset any economic weakness, he wrote.
The package and delivery industry is a competitive field, with UPS doing battle with rivals such as FedEx and the U.S. Postal Service.
There is also concern that Amazon Inc. may enter the fray. Amazon has leased 40 cargo planes from Boeing and Atlas Air to create an air cargo network. Amazon said it doesn't plan to build its own delivery service and is just looking to work more closely with package-delivery services such as the U.S. Postal Service, FedEx and UPS, but the cargo fleet and drone experimentation are clear steps in taking more control in the delivery process.
For the three months that ended June 30, United Parcel Service Inc. earned $1.27 billion, or $1.43 per share. That compares with $1.23 billion, or $1.35 per share, a year earlier.
The results met the expectations of analysts polled by Zacks.
UPS shares slipped 63 cents, or less than 1 percent, to close Friday at $108.10. Its shares are up more than 6 percent for the past year.
Information for this article was contributed by The Associated Press and Michael Sasso of Bloomberg News.
Business on 07/30/2016