UPS shrugs off international airfreight woes and pension payments
27 / 10 / 2016
UPS has revealed a 3.6% increase in third-quarter earnings at $1.44 per share, compared with the same period last year. International operating profit increased 14% to $576m, the seventh consecutive quarter of double-digit growth, said the express logistics company.
Total reported revenue was $14.9bn, up 4.9% over the same quarter last year, or 5.1% on a currency-neutral basis, ignoring the effects of fuel surcharges and exchange rates.
Chairman and chief executive, David Abney, predicted: “The investments we are making in technology and capacity will ensure UPS continues to deliver well into the future.”
Looking ahead, while UPS does not provide full-year 2016 earnings per share guidance because it is not possible to reliably forecast certain items, it could be affected by a pension accounting adjustment, it said.
US domestic package revenue increased 4.8% over the third quarter of 2015, to $9.3bn with average daily volume up 5.7%; deferred air products were up 10%, next day air up 5.9% and ground products 5.2%. Strong business-to-consumer growth trends continued, while business-to-business growth was boosted by online retail returns.
Revenue per package increased 0.9% compared with last year although this was blunted b lower fuel surcharge rates.
The US domestic segment remains strong says UPS; operating profit was $1.3bn and operating margin was 13.5%.
Meanwhile, international operating profit jumped 14% to $576m, a record for any third. Volume grew in all products, with base-rate increases and network efficiency gains all contributing to the improvement.
Revenue was $3.0bn, up 2.2% compared to the third quarter last year, or 3.1% higher on a currency-neutral basis, despite lower fuel surcharges. Daily export volume increased 7.1%, thanks double-digit gains out of Asia and high-single digit increases cross-border shipments within Europe.
Revenue per package however decreased 2.8% from the previous year, with currency-neutral yields down 1.9% and lower fuel surcharge rates reduced revenue-per-package growth.
Supply chain and freight revenue increased 8.1%, to $2.6bn. Revenue growth was due mainly to the Coyote Logistics acquisition midway through the third quarter last year while weak market conditions in air freight forwarding and less than truckload weighed on top-line growth.
Market conditions in international air freight and the US truckload brokerage remain soft, UPS warns, although there were increased loads at Coyote Logistics. The forwarding business enjoyed tonnage growth in North American airfreight, partially offsetting the decline in international air freight.