By Dave Sebastian

United Parcel Service Inc. said its revenue rose in the latest quarter, a period that saw mounting supply-chain woes world-wide, as small and midsize businesses drove gains in the U.S.

Businesses faced disruptions in the first three months of the year as the extreme Texas freeze and port backlogs compounded pandemic-driven problems. The package-delivery giant on Tuesday posted revenue of $22.91 billion, up 27% from a year earlier and ahead of Wall Street expectations.

U.S. small and midsize businesses' average daily volume growth reached an all-time high of about 36%, outpacing larger customers' growth rate for the third consecutive quarter, Chief Executive Carol Tomé said. Ms. Tomé, a former Home Depot Inc. finance chief and longtime UPS board member, is focusing on cutting costs and reining in spending while raising shipping rates and getting more business from higher-margin customers like smaller businesses and the healthcare industry.

"Our focus on SMB and healthcare does not take away our desire to grow our large enterprise accounts, which are many large retailers," Ms. Tomé said on a conference call Tuesday.

Shares rose 10% on Tuesday, closing at $194.13 a share.

UPS, like its rival FedEx Corp., has been handling a surge in e-commerce orders during the Covid-19 pandemic as customers shopped from home. Profits in the company's domestic and international segments rose to a record, the company said. U.S. revenue rose 22% to $14.01 billion in the quarter, while international revenue rose 36% to $4.61 billion, led by Asia and Europe.

UPS also benefited from growth in healthcare activities. The company had delivered roughly 196 million vaccine doses to about 50 countries and territories as of last week, Ms. Tomé said.

Average daily volume rose about 14%, the company said. UPS reported $4.29 billion in revenue for its supply chain and freight segment, up 34% from the prior year due to strong demand

UPS reported a profit of $4.79 billion for the quarter, compared with $965 million in the comparable period last year. Earnings were $5.47 a share, compared with $1.11 a share a year earlier.

First-quarter results included a net benefit of $2.4 billion, or $2.70 a share, that includes a pension benefit, the company said.

Adjusted earnings were $2.77 a share. Analysts polled by FactSet were expecting adjusted earnings $1.72 a share.

The company said it isn't providing 2021 earnings and revenue estimates due to economic uncertainty, though it continues to expect capital expenditures of about $4 billion and for the sale of UPS Freight to close in the second quarter.

UPS in January agreed to sell its freight business to rival TFI International Inc. for $800 million, saying it is pulling out of the domestic trucking market on the soaring small-package-delivery business. The sale is one of the biggest strategic shifts by Ms. Tomé since she took the CEO position in June.

Ms. Tomé said UPS will continue investing in time and transit as it aims to increase Saturday delivery coverage to 90% of the U.S. population by October.

"But there is no finish line here," Ms. Tomé said. "We are expanding our weekend deliveries."

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

04-27-21 1642ET