UPS Reports Positive Third Quarter and Optimism for Fourth Quarter

October 24, 2018


UPS continued to impress with their latest quarterly earnings. Overall revenue was up just shy of 8.0% at $17.4 billion while adjusted net income was up 25.6% to $1.6 billion.

Each division reported good revenue gains, but Domestic and International slipped in terms of operating profit. For Domestic, operating profit, which slipped 6.1%, was impacted by “planned increases in pension expense and the cost of ongoing network improvements.” Meanwhile for International, which declined 5%, “currency and fuel, as well as some economic softening related to changing trade policies negatively impacted gross profit.”

The Supply Chain and Freight division reported not only double-digit revenue growth but also with gross profit, 12.0% and 24% respectively. A focus on small and medium-sized customers, revenue management initiatives and high-value solutions generated yield improvement and helped drive double-digit growth.

It was also announced on the earnings call that UPS had fully acquired its express unit in India. UPS has operated in the country since 1988 and has established several partnerships with local players.  According to UPS’s press release, the move to obtain full ownership demonstrates its commitment to invest strategically in high-growth international markets and countries with expanding economies such as India. Indeed, according to the World Bank, India’s GDP in 2017 was 6.62% but it has declined since 2015 after reaching a high of 8.15%. While its economy still remains strong, it is an emerging market and will fluctuate, as do emerging markets in general, until it settles for a steady growth rate. Until then, a number of companies join UPS including Amazon, Alibaba, and VMWare in investing in the country.

UPS remains positive for the upcoming peak season as well as for the remainder of 2018. CFO Richard Peretz noted “Improvements in revenue quality and our new, highly-automated capacity gives us confidence in a successful peak season for our customers and share-owners.”

For the remaining year, UPS expects 4Q18 adjusted EPS to increase about 15%, despite anticipated currency headwinds in emerging markets and one less operating day during peak season.  Capital expenditures in 2018 remain planned between $6.5 billion and $7.0 billion.

While UPS did not reveal 2019 rate increases on the earnings call, Spend Management Experts anticipates that they will be announced in the coming weeks, pending Teamster negotiations. Be prepared for the increases and find out how we can help you optimize your contract today.

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UPS Reports Positive Third Quarter and Optimism for Fourth Quarter

October 24, 2018


UPS continued to impress with their latest quarterly earnings. Overall revenue was up just shy of 8.0% at $17.4 billion while adjusted net income was up 25.6% to $1.6 billion. Each division reported good revenue gains, but Domestic and International slipped in terms of operating profit. For Domestic, operating profit, which slipped 6.1%, was impacted by “planned increases in pension expense and the cost of ongoing network improvements.” Meanwhile for International, which declined 5%, “currency and fuel, as well as some economic softening related to changing trade policies negatively impacted gross profit.” The Supply Chain and Freight division reported not only double-digit revenue growth but also with gross profit, 12.0% and 24% respectively. A focus on small and medium-sized customers, revenue management initiatives and high-value solutions generated yield improvement and helped drive double-digit growth. It was also announced on the earnings call that UPS had fully acquired its express unit in India. UPS has operated in the country since 1988 and has established several partnerships with local players.  According to UPS’s press release, the move to obtain full ownership demonstrates its commitment to invest strategically in high-growth international markets and countries with expanding economies such as India. Indeed, according to the World Bank, India’s GDP in 2017 was 6.62% but it has declined since 2015 after reaching a high of 8.15%. While its economy still remains strong, it is an emerging market and will fluctuate, as do emerging markets in general, until it settles for a steady growth rate. Until then, a number of companies join UPS including Amazon, Alibaba, and VMWare in investing in the country. UPS remains positive for the upcoming peak season as well as for the remainder of 2018. CFO Richard Peretz noted “Improvements in revenue quality and our new, highly-automated capacity gives us confidence in a successful peak season for our customers and share-owners.” For the remaining year, UPS expects 4Q18 adjusted EPS to increase about 15%, despite anticipated currency headwinds in emerging markets and one less operating day during peak season.  Capital expenditures in 2018 remain planned between $6.5 billion and $7.0 billion. While UPS did not reveal 2019 rate increases on the earnings call, Spend Management Experts anticipates that they will be announced in the coming weeks, pending Teamster negotiations. Be prepared for the increases and find out how we can help you optimize your contract today.

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