Atlanta-headquartered United Parcel Service (UPS) saw strong growth in its third-quarter 2016 diluted earnings per share, which rose US$1.44, or 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 revenue was $14.9 billion, up 4.9% over the same quarter last year, growth tempered by headwinds from changes in fuel surcharges and currency exchange rates. If currency were steady, revenue increase would be 5.1%, said UPS in a statement.
“We are providing value to UPS customers worldwide and our solutions enabled strong growth this quarter,” said David Abney, group chairman and CEO. ”The investments we are making in technology and capacity will ensure UPS continues to deliver great results well into the future.”
Adjusted earnings guidance for full-year 2016 remains at $5.70 to $5.90 per diluted share.
“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.”
The U.S.-based company’s domestic package revenue increased 4.8% over the third quarter of 2015, to $9.3 billion, as average daily volume increased 5.7%, with air and ground volume deliveries both going up.
“Strong business-to-consumer (B2C) growth trends continued this quarter, while business-to-business (B2B) growth was positive primarily due to online retail returns,” said UPS.
Revenue per package increased 0.9% over the same period last year, with fuel surcharge rates reducing revenue per package growth by about 40 basis points.
International operating profit jumped 14% to $576 million, a record for any third quarter in the company’s history. “Volume growth in all products, base-rate increases and network efficiency gains contributed to the improved profitability,” the logistics giant said.
Revenue was $3.0 billion, up 2.2% compared to the third quarter last year. 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 due to headwinds generated by currency fluctuations, lower fuel surcharge rates, as well as changes in trade lanes and product mix, which offset base rate improvements.
Meanwhile, supply chain and freight revenue increased 8.1% to $2.6 billion. Revenue growth was primarily due to the Coyote Logistics acquisition midway through the third quarter last year. Weak market conditions in the air freight forwarding and LTL (less than truckload) markets weighed on top-line growth.
Market conditions in international air freight and the U.S. truckload brokerage industries remain soft. Despite these conditions, the company stated it saw increased loads in Coyote Logistics. The forwarding business experienced tonnage growth in the ocean and North American air freight products, partially offsetting the decline in international air freight tonnage
The distribution unit experienced mid-single-digit revenue growth this quarter. Revenue gains in the healthcare, retail and aerospace sectors led the unit higher.
UPS freight LTL revenue per hundredweight increased 3.7% over the same period last year. “Total tonnage remains challenged by current market conditions. The business unit continued to focus on disciplined revenue management and profitable trade lanes,” said UPS.
