Revenue and net income jump for UPS in Q3

UPS recorded a consolidated revenue rise of 7.9 per cent in the third quarter (Q3) to $17.4 billion while net income was also up about 20 per cent to $1.5 billion – compared to Q3 in 2017.

Chairman and chief executive officer, David Abney said: “Our business strategies position UPS to improve operating leverage and many of our actions are already contributing to performance gains.

“We generated another quarter of industry-leading margins and strong free cash flow and we are confident in the outlook for the business.”

In Q3, the express freight and courier firm’s Supply Chain and Freight division’s operating profit was up 24 per cent to $242 million and adjusted operating profit jumped 33 per cent to $260 million.

The division’s revenue increased more than 12 per cent to $3.5 billion, as UPS said the business units benefited from strategies focused on small and medium-sized customers. The Forwarding business led all units with 17 per cent revenue growth, as revenue management initiatives and high-value solutions generated yield improvement.

Abney said: “Supply Chain and Freight performance was outstanding this quarter, as the unit delivered double-digit growth in both revenue and adjusted operating profit.

“UPS will continue to leverage our vast forwarding, customs, and supply-chain solutions to help customers expand their existing businesses and reach new markets.”

Segment wise in Q3, the US Domestic segment experienced strong revenue growth of 8.1 per cent to $10.4 billion, driven by high demand for the company’s solutions and robust yield expansion compared to 3Q 2017, but operating profit fell to $949 million from $1 billion due to planned increases in pension expense and the cost of ongoing network improvements.

International segment revenue increased three per cent to $3.47 billion with growth in all regions compared to the same period last year, on both a reported and currency-neutral basis but operating profit fell from $606 million in Q34 2017 to $536 million because of headwinds primarily from currency and fuel, as well as some economic softening related to changing trade policies.

Export volume also increased across all regions and exports grew nearly three per cent on top of 19 per cent growth last year. Year-over-year comparisons are affected by the strong 3Q 2017 growth UPS experienced in Europe.

UPS’ chief financial officer, Richard Peretz said the future outlook was good: “Improvements in revenue quality and our new, highly-automated capacity gives us confidence in a successful peak season for our customers and shareowners.”