Home » 3PL/4PL, Breaking News » UPS upbeat its ‘positive momentum’ to lead to strong full year profit

United_Parcel_ServiceGlobal logistics giant United Parcel Service said it is on a continued “positive momentum” following its above-expectations earnings in the third quarter, as it reaffirmed it is looking to reach the higher-end range of its total 2015 target.

The Atlanta-based US company said it posted diluted earnings per share of $1.39 for the third quarter of 2015, a 5.3% increase over the same period last year, and recorded international operating profits of $507 million, up more than 10%.

But total revenue dropped slightly to $14.2 billion on currency exchange rate fluctuations and lower fuel surcharges; on adjusted terms, revenue grew 1.8% from July to September 2015 compared to the same quarter last year.

“Third quarter results reflect strong progress on our long-term initiatives despite uneven economic conditions,” said David Abney, the company’s chief executive officer.  “We remain committed to these strategies to support customers and improved shareowner value.”

Total company shipments increased 1.9% over the third quarter last year to 1.1 billion packages, led by US air products and European trans-border shipments.   

US domestic 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 by about 250 basis points.

Daily shipments were up 0.6%, due primarily to faster growing premium air products. Deferred air products jumped 13% and next-day air service was 4% higher as more e-commerce shippers chose to upgrade to air services. Ground products dropped slightly as slowing industrial production contributed to the first year-over-year decrease in business-to-business shipments this year. Meanwhile, the pace of growth for all business-to-consumer products increased this quarter.

Operating profit declined 1.6% to $1.3 billion with an operating margin of 14.2%.  The year-over-year change in fuel surcharge revenue fell faster than fuel-related expense, creating a drag on operating results.

Daily export shipments were up 1.2% over the prior year. Growth in Europe trans-border and US inbound shipments outweighed a drop in Asia and US exports.

Supply chain & freight revenue increased slightly to $2.4 billion. Lower forwarding revenue and a drop in less-than-truckload (LTL) tonnage was offset by the addition of revenue from Coyote Logistics. Despite about $20 million in Coyote transaction fees, total segment operating profit increased to $219 million. Operating margin expanded over the prior year period to 9.1%.

“We are generating positive momentum as a result of the strong execution of our business units,” said Richard Peretz, chief financial officer. “This gives us confidence we will achieve the higher-end of our full-year earnings per share guidance.”

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.

Photo: Konstantin Von Wedelstaedt

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