Atlanta-based United Parcel Service (UPS) announced better-than-expected second-quarter 2019 earnings, with growth in all segments.
UPS, the world’s biggest package delivery company, reported US$1.96 in adjusted earnings per share (EPS) for the second quarter, while total operating profit grew nearly 21%, and 6.3% on an adjusted basis.
Consolidated revenue increased 3.4% to $18 billion, driven by gains in average daily volume in the U.S. and higher-quality, currency-neutral revenue in the international segment, said UPS in a statement.
“The company turned the rising demand for next-day service into strong financial results in the U.S. and leveraged asset-light and proven cost management strategies in the International and Supply Chain and Freight segments,” it said.
“Our Transformation initiatives are generating greater efficiencies across the network and, when combined with our growth strategies, UPS achieved profit growth in all segments,” said David Abney, UPS chairman and CEO.
“We also announced a very extensive roll-out of new products and services such as UPS My Choice for Business, expanded UPS Access Points, and UPS Worldwide Economy, among others, for small- and medium-sized businesses, all designed to generate additional profitable growth.”
For the international segment, the unit generated its best second-quarter profit in history and expanded adjusted operating margins while navigating areas of trade uncertainty, said UPS.
International volume slightly declined “due to global macroeconomic pressure and tough year-over-year comparisons, as 2Q 2018 exports grew 9.5%.”
Total revenue per piece fell less than 1%, but grew nearly 2% when adjusting for currency. International domestic revenue per piece rose 0.3%, an increase of 5.6% on a currency-neutral basis. Operating profit increased more than 7%, or by 1.7% on an adjusted basis.
The supply chain and freight segment grew operating profit to more than $270 million, a double-digit increase for the quarter. “Successful cost management enabled by the company’s asset-light strategies delivered strong financial results while revenue was pressured by softer trade,” said the statement.
Operating margins for the segment expanded to 8% on an adjusted and unadjusted basis, “due to strong execution, disciplined cost management and strategic initiatives that focus on delivering excellent service levels and growing high-quality revenue from the SMB market.”
International air freight achieved robust profit growth on a decline in tonnage, driven by expanded buy/sell spreads. UPS freight achieved a 3.9% increase in revenue per LTL (less-than-truckload) hundredweight as the unit focused on revenue quality.
UPS reaffirmed its adjusted full-year diluted EPS in the range of $7.45 to $7.75. Meanwhile, 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.
Photo courtesy of UPS
