United Parcel Service Inc. is expected to report slightly higher second-quarter results Tuesday as strengthening demand for domestic packages and higher prices offset increasing uncertainty and slowing growth overseas.
WHAT TO WATCH FOR: UPS isn't as worried about U.S. growth as it was this time last year. Shipping demand and prices in its domestic network is surprisingly strong despite tepid job growth and sluggish consumer spending.
Concerns have now shifted overseas, to anemic economies in Europe and slowing growth in once-booming Asian markets, especially China. A slowdown in Europe, or trouble raising prices as economies weaken, will spell trouble for the world's largest package delivery company, which derives about half its international revenue from the region. That's far more than its Memphis-based rival FedEx Corp.
A slowdown in Europe also hits UPS particularly hard because the company is in the process of acquiring Dutch rival TNT. The two announced last week that they expect the deal to be completed in the last three months of this year, later than they originally anticipated, because the European Commission wants to take a closer look at certain parts of the deal. The $6.8 billion purchase of TNT Express would be UPS' biggest ever.
Investors will be keeping a close eye on UPS' outlook for the rest of the year as well. The company has said earnings per share will grow 9 to 15 percent from 2011.
WHY IT MATTERS: UPS reflects the economies of the world unlike virtually any other company. UPS does business in more than 220 countries and territories and its performance is considered a reliable predictor of broader economic health because of the large number of packages it moves for businesses and consumers every day.
WHAT'S EXPECTED: Analysts polled by FactSet expect net income of $1.17 per share on revenue of $13.69 billion.
LAST YEAR'S QUARTER: The Atlanta company earned $1.06 billion or $1.07 per share on revenue of $13.19 billion from April through June of 2011.
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