United Parcel Service (UPS) said it delivered “solid performance” in the third quarter, with its earnings per share (EPS) up double-digits, which the U.S. logistics leader said was the result of continued network efficiencies and new solutions.
UPS said third-quarter 2019 adjusted EPS was US$2.07, a 13.7% increase over the same period last year. The company delivered operating profit growth of more than 20%, with margin expansion in all segments, led by the U.S. domestic and international segments, according to a company statement released on October 22.
“Our results reflect significant progress from our transformation initiatives, and our ability to generate growth and deliver increased efficiencies in a dynamic economic environment,” said David Abney, UPS chairman and CEO. “As we recently announced, we continue to forge new partnerships and create innovative solutions to accelerate growth in the most attractive opportunities.”
Overall consolidated revenue increased 5% to $18.3 billion in the third quarter compared to the same period last year, driven by strong average daily volume growth in the U.S. Its net income was $1.750 billion (adjusted, $1.797 billion), up from $1.508 billion ($1.581 billion when adjusted) in the third quarter of 2018.
Total operating profit grew more than 23%, and 20.1% on an adjusted basis, led by the U.S. domestic and international segments.
In the U.S. domestic segment, total volume across all products grew more than 9%. Growth came from both B2C and B2B shippers, led by the retail, healthcare and high-tech sectors.
“The investments we are making in new facilities and automation in our network, coupled with solid execution of our strategies, are producing strong results, including strong, positive operating leverage,” said Abney. “We see significant near-term benefits to both top- and bottom-line results in the U.S. and continued momentum into the future.”
The international segment reported operating profit growth of more than 24% in the third quarter compared to the same months last year, or by 20.3% on an adjusted basis. The operating margin remained strong at 19.1%; adjusted operating margin expanded 320 basis points.
The company’s performance is the result of a number of items in the quarter, including strong cost control, good execution and targeted domestic and export growth, said UPS.
International saw export volume growth on intra-European trade lanes and virtually all Asia trade lanes except Asia-U.S.
The supply chain and freight segment’s performance was driven by small and medium-sized customers that generate higher-quality revenue, as well as cost management actions throughout the network.
Operating margin expanded to 7.3%, and to 7.6% on an adjusted basis.
Logistics revenue increased more than 7% from growth in the healthcare, retail and manufacturing sectors.
UPS freight produced an increase in revenue per LTL (less-than-truckload) hundredweight of nearly 4%, driven by its focus on small and medium-sized businesses.
The forwarding unit adjusted costs and partially offset the negative revenue impact of trade uncertainty.
“UPS delivered solid performance for the third quarter,” said Brian Newman, UPS’s chief financial officer. “Positive impacts from our transformation initiatives are visible in our results as we continue to improve network efficiencies and create new solutions that will open more growth opportunities well into the future.”
The company reaffirmed its full-year adjusted diluted EPS in the range of $7.45 to $7.75.
“Guidance assumes no further deterioration regarding global trade uncertainty or U.S. industrial weakness,” it said.
Photo courtesy of UPS
