UPS (NYSE: UPS) reported Q1 EPS of $1.27, $0.05 better than the analyst estimate of $1.22. Revenue for the quarter came in at $14.4 billion versus the consensus estimate of $14.57 billion.

U.S. Domestic Package

U.S. Domestic operating profit increased 7.6% to $1.1 billion, and operating margin expanded 50 basis points to 12.1%. Productivity improvements bolstered by technology, combined with lower fuel cost resulted in a 1.9% reduction in cost per unit compared to the same quarter in 2015.

Total revenue increased 3.1% over the first quarter of 2015, to $9.1 billion. Average daily package volume increased 2.8% with Ground products up 3.3% and Next Day Air up 3.0%. High demand from ecommerce shippers contributed to fast growth in business-to-consumer (B2C) deliveries this quarter.

Revenue per package declined by 1.3% as base rate improvements were offset by lower fuel surcharges and changes in product and customer mix. Fuel surcharge rates reduced yield growth by 120 basis points.

International Package

International operating profit jumped more than 15% to $574 million during the quarter, with improved performance from all regions. Disciplined pricing combined with network efficiency gains contributed to the increase in profitability.

Revenue was down 1.9%, however on a currency-neutral basis it was flat to the prior year. Lower fuel surcharges reduced revenue by approximately 200 basis points. Daily Export shipments increased slightly, as growth out of Asia and Europe offset declines in U.S. exports. Shipment growth from middle-market customers outpaced enterprise accounts during the quarter.

Total revenue per package increased 1.6% on a currency-neutral basis. Solid base rate improvements across all regions were reduced by changes in fuel surcharge rates. Premium products grew faster than non-premium during the quarter.

UPS reaffirmed FY2016 guidance.

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