Home » 3PL/4PL, Breaking News » UPS Q1 earnings hurt by bad weather

United Parcel Service (UPS) announced first-quarter 2019 earnings of US$1.11 billion, or $1.28 per share, slipping from $1.35 billion, or $1.55 per share, in the same quarter in 2018, saying severe winter weather hurt U.S. profit. This was compounded by one less operating day in the quarter than a year ago, and an impact of Easter moving to mid-April. Adjusted earnings per share (EPS) was $1.39.

Consolidated revenue increased to $17.16 billion in the first quarter of the year from $17.11 billion last year, driven by gains in average daily volume, and benefits from higher-quality revenue and from investments in its global network, said the logistics and transport giant in a statement.

“The first quarter marked a good start to the year, as we executed against our strategy and generated solid performance across our business,” said David Abney, UPS chairman and CEO.

“Our Transformation initiatives are enhancing revenue quality and creating network efficiencies that will increase our long-term earnings power. We are on a path to take advantage of growth opportunities and enhance our future performance.”

For the international segment, revenue was down to $3.46 billion in Q1 2019 from $3.53 billion last year. Disciplined yield management, coupled with growth from middle-market B2B customers, contributed to gains in revenue quality, said UPS.

Operating profit was $528 million in the period covered, down from $594 million in the corresponding period last year. But adjusted operating profit was $612 million for the first quarter of this year.

“The International segment reported record first-quarter operating profit, reflecting the strength and flexibility of the company’s global network and its ability to execute in a changing global trade environment,” said the Atlanta-based company.

Supply chain and freight had revenue of $3.22 billion, lower than the $3.35 billion earned in the first quarter of 2018. Operating profit rose to $200 million from $170 million on the back of cost management actions helping to balance market changes to volume and revenue, and enabled profit momentum, most notably in Coyote.

“International Air and Ocean Freight made significant contributions to operating profit growth as a result of greater alignment with small and medium-sized customers,” said UPS.

Looking ahead, the company reaffirmed adjusted diluted EPS for the full year in the range of $7.45 to $7.75.

“Transformation is creating a firm foundation for performance well into the future,” said Richard Peretz, UPS’s chief financial officer. “Our strategies and initiatives are driving additional network efficiency and flexibility, and we remain confident in achieving our targets for the year.”

In the second quarter, the company will open about 30% of its planned 2019 capacity; no facilities were opened during the same period last year. Thus onboarding costs will weigh on the second-quarter results.

Overall operating profit in the second quarter is expected to grow. Adjusted EPS is anticipated to be relatively flat to last year driven by planned pension financing costs.

Third-quarter adjusted EPS is expected to benefit from numerous items including one additional operating day and year-over-year international benefits from 2018 commodities headwinds that should not repeat, said UPS.

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