UPS records third-quarter profit improvement

Integrator UPS recorded increases in operating and net profits during the third quarter of the year despite a decline in revenues.
The New York Stock Exchange-listed express giant saw third-quarter revenues decrease by 0.4% on a year earlier to $14.2bn, with its international package segment experiencing the greatest downturn in takings of the various divisions that make up the business.
It blamed the decline in revenues on currency exchange rates and lower fuel surcharges and said on a currency neutral basis revenues had increased by 1.8%.
The company performed better on a profit basis, with third-quarter operating income climbing by 1.5% year on year to $2bn and net income for the period jumping by 3.5% on last year to $1.3bn.
The profit increase was led by its international package segment, which benefitted from revenue quality enhancements, network improvements and export volume growth.
Its supply chain and freight segment saw third-quarter revenues increase by 0.1% to $2.4bn, while operating profit grew by 1.9% on a year earlier to $219m.
Revenues in the division benefitted from the acquisition of trucking firm Coyote Logistics, although the acquisition transaction fees had a negative impact of $20m on profits.
“The freight forwarding business continues to benefit from revenue quality initiatives started earlier in the year,” UPS said.
“While tonnage and revenue were down, improvements to the network and pricing drove significant operating profit expansion.
“The distribution business continues to build out its infrastructure to serve the healthcare and aerospace industries.
“Revenue increased slightly as growth was dampened by the effects of currency translations. 
“UPS freight revenue dropped 8.6% due to lower fuel surcharges and reduced less-than-truckload tonnage during the quarter.
“Changes in fuel surcharges contributed to about 600 basis point reduction in the revenue growth rate.  Soft market demand combined with selective pricing initiatives also contributed to the decline.”
The company’s guidance for 2015 full-year diluted earnings per share is $5.05 to $5.30, an increase of 6% to 12% over adjusted 2014 results.
Its US domestic division’s revenue of $8.9 billion was up 1.9% over the same quarter last year.  Lower fuel surcharge rates dampened revenue growth and lowered revenue per package.

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