- UPS reported revenue that fell below analyst expectations and earnings per share that beat them.
- United Parcel Service said declines came from its supply chain solutions division, which includes freight forwarding.
- The company reaffirmed its full year guidance of $102 billion in revenue and adjusted operating margin of 13.7%.
United Parcel Service reported mixed third quarter results Tuesday morning, posting earnings that beat analyst expectations and revenue that fell short of predictions.
Here’s how the company performed compared to Wall Street expectations, according to Refinitiv.
- Earnings per share $2.99 vs. $2.84 expected.
- Revenue $24.16 billion vs. $24.30 billion expected.
Shares of the company rose more than 4% in light volume during premarket trading.
The company said softening demand globally hurt volumes, which was partially offset by higher pricing driven by inflation.
UPS also reaffirmed its outlook for full-year revenue of $102 billion and adjusted operating margin of about 13.7%, despite what CEO Carol Tomé called a “very dynamic” macroeconomic environment.
The company did scale back its expected capital expenditures to $5 billion from about $5.5 billion, however.
Revenue in U.S. domestic and international packages grew from the same period last year, while the company’s supply chain solutions saw revenues shrink 6.3% due to declines in air and ocean freight forwarding.
Freight forwarding is the company’s large-volume pallet shipping operation, which — distinct from its small package services — delivers large quantities of cargo across the world, managing customs and border logistics. The services sometimes use UPS vehicles and can also consolidate shipments into other vehicles and their routes.
The company said the declines were partially offset by growth in its logistics and health care businesses.
The shipping giant struggled in the prior quarter with declining volumes, partially offset by higher rates. The decrease in shipments was attributed to less business with large clients like Amazon.
For the holidays, Tomé said the company expects shipments to peak later in December than last year, as consumers return to more pre-pandemic spending habits.
UPS expects holiday volumes to be lower than last year, which the company attributed to changes in its contracts with larger clients. Last quarter, UPS said it was reducing its work with Amazon.
Rival FedEx lowered its holiday volume forecast in October, weeks after it reported weakening demand, announced rate hikes and implemented broad cost-cutting measures. FedEx CEO Raj Subramaniam warned of a “worldwide recession.”
This is breaking news. Check back for updates.
Source: Business - cnbc.com
