UPS' Net Income Rises to $1.26 Billion as Revenue Dips
UPS Inc. posted a 3.5% increase in third-quarter net income to $1.26 billion from $1.21 billion, even as quarterly revenue dipped by 0.4% to $14.24 billion from $14.29 billion, compared with the same three months in 2014.
The Atlanta-based parcel carrier and logistics provider said revenue growth was hemmed by fuel surcharges that fell year-over-year and a strong U.S. dollar that devalued the contribution of foreign operations. Volume growth was mixed, varying by type of shipping and geography, but the world’s largest trucking company said in its Oct. 27 earnings report and conference call that it often was able to improve base freight rates as fuel surcharges declined.
UPS management predicted a strong fourth quarter, which will be dominated by holiday-related consumer spending. Problems with third-quarter volume were attributed to declines in U.S. manufacturing exports as other nations struggled to buy goods made here.
Quarterly earnings per share rose to $1.39 from $1.32.
“Our international segment again produced double-digit growth in operating profits. The U.S. domestic [package] and supply chain and freight units performed as planned. We are pleased with the results this quarter, especially given the uneven global economy,” CEO David Abney said during the conference call.
The largest contributor to profit increase came from the international package division, which jumped 10.2% to $507 million for the quarter, even as the division’s revenue dropped 7% and volume dipped by 1.5%.
The work that remained paid better, though, as quarterly operating margin increased to 17.1% from 14.45% during last year’s quarter.
U.S. ground parcel shipping, the company’s largest single product line, saw volume dip by 0.8% year-over-year to 12.11 million packages per day. However, quarterly revenue for the division grew by 1.4% to $6.3 billion because average revenue per ground package expanded by 0.6% to $8.02.
In ground shipping, also, the company was able to bolster basic freight rates as fuel surcharge revenue retreated.
At UPS Freight, the company’s less-than-truckload carrier, quarterly volume declined but pricing improved. Quarterly LTL revenue dropped 9.5% to $631 million.
Shipments transported dropped by 5.2%, and the average weight per shipment shrank by the same 5.2%, meaning gross weight hauled during the quarter fell by 10.2% to 2.77 billion pounds from 3.1 billion in last year’s third quarter.
However, LTL revenue per hundredweight grew by 0.8% to $22.78.
