Express package delivery firm UPS has reported that net income rose 4.1 per cent during the three months ended June 30 to US$1.1 billion.

During this period, operating margin increased to 14.5 per cent with improvements in the international package, supply chain and freight segments despite a "challenging" US small package market, a company statement said.

Revenue rose by 3.9 per cent over the corresponding period a year ago to $12.19 billion. Operating profit rose slightly to $1.77 billion compared to $1.70 billion for the second quarter of 2006.

UPS closed the quarter with $2.1 billion in cash and marketable securities. For the first six months, UPS also invested $1.2 billion in capital expenditures.

International export revenues jumped 14 per cent on double-digit volume growth to $2.50 billion. UPS transported during the reporting period 1.80 million international packages on average each day. UPS Freight's less-than-truckload (LTL) revenue climbed 10.5 per cent on a 12 per cent year-on-year increase in shipments.

Revenue from domestic packages amounted to $7.58 billion, up from $7.46 billion a year ago.

"Strong gains in our international package segment offset a lack of growth in the US business. We're also executing well in our supply chain and freight business and are pleased with the profit improvements in this segment. We remain confident in the long-term growth prospects that the dynamic global marketplace offers UPS," said Mike Eskew, UPS's chairman and CEO.

Ground volume was flat during the quarter, reflecting declining growth rates in both US industrial production and business-to-consumer shipments. Next Day Air volume increased 1.6 per cent to partially offset a four per cent decline in deferred air volume. Total US revenue per piece remained firm, up 1.7 per cent, with revenue per piece on ground volume rising three per cent.

Total export volume increased 10.4 per cent. Europe posted a double-digit export volume gain, reflecting strong cross-border growth. Asia export volume jumped 25 per cent with particularly strong growth out of China. For the segment, operating profit increased 14.7 per cent and margins expanded 50 basis points to 19 per cent.