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UPS Grew Profits in Third Quarter

UPS announced third-quarter 2016 diluted earnings per share of $1.44, a 3.6% increase over the same period last year. International operating profit increased 14% to $576 million, achieving the seventh consecutive quarter of double-digit growth.

Total reported revenue was $14.9 billion, up 4.9% over the same quarter last year. Changes in fuel surcharges and currency exchange rates negatively affected revenue growth. On a currency-neutral basis, revenue increased 5.1%. In addition, lower fuel surcharge rates reduced revenue growth by approximately 50 basis points.

“We are providing value to UPS customers worldwide and our solutions enabled strong growth this quarter,” said David Abney, UPS chairman and CEO. “The investments we are making in technology and capacity will ensure UPS continues to deliver great results well into the future.”

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Outlook 
The company does not provide full-year 2016 earnings per share guidance on a GAAP basis, or a reconciliation from its full-year 2016 adjusted earnings per share guidance to full-year 2016 GAAP earnings per share, because it is not possible to reliably forecast certain items that could impact GAAP earnings per share. In the fourth quarter, GAAP earnings per share is subject to an expected year-end mark-to-market (“MTM”) pension accounting adjustment, which could be material.

The MTM adjustment is significantly impacted by changes in interest rates, financial returns, demographics and other actuarial assumptions. As a result, the MTM pension adjustment is not included in the company’s 2016 full-year earnings per share guidance or a reconciliation to 2016 GAAP earnings.

The company’s adjusted earnings guidance for full-year 2016 remains at $5.70 to $5.90 per diluted share. Adjusted earnings per share refers to the company’s expectation for earnings per share before the impact of the expected MTM pension accounting adjustment.

“Through the third quarter we are performing according to our expectations, and we’ve taken the necessary steps to ensure we capitalize on record volume levels during peak season,” said Richard Peretz, UPS chief financial officer. “As a result, we remain confident in achieving our 2016 full-year guidance for adjusted diluted earnings per share.”

U.S. Domestic Package
U.S. Domestic revenue increased 4.8% over the third quarter of 2015, to $9.3 billion. Average daily package volume increased 5.7%, with Deferred Air products up 10%, Next Day Air up 5.9% and Ground products up 5.2%. Strong business-to-consumer (B2C) growth trends continued this quarter, while business-to-business (B2B) growth was positive primarily due to online retail returns.

Revenue per package increased 0.9% over the same period last year. Fuel surcharge rates reduced revenue per package growth by about 40 basis points. Increases in base rates offset changes in product and customer mix.

The underlying performance of the U.S. Domestic segment remains strong and is consistent with the first half of the year. Operating profit was $1.3 billion and operating margin was 13.5%.

International Package 
International operating profit jumped 14% to $576 million, a record for any third quarter in company history. Volume growth in all products, base-rate increases and network efficiency gains contributed to the improved profitability.

Revenue was $3.0 billion, up 2.2% compared to the third quarter last year. On a currency-neutral basis, revenue was 3.1% higher. In addition, lower fuel surcharges reduced revenue growth by approximately 70 basis points. Daily Export volume increased 7.1%, on double-digit gains out of Asia and high-single digit cross-border shipments within Europe.

Revenue per package decreased 2.8% from the prior year, with currency-neutral yields down 1.9%. Additionally, lower fuel surcharge rates reduced revenue-per-package growth. Changes in trade lanes and product mix offset base rate improvements.

See the full release on the UPS website:

SourceUPS Press Release

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Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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