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October 24, 2018 11:00 AM, EDT

UPS Reports Strong Revenue Growth, Higher Profits in 3Q

UPS building and truck Tim Boyle/Bloomberg

UPS Inc. reported strong revenue growth and higher profits in the third quarter, despite international headwinds from currency valuations, rising fuel costs and ongoing investment in transformation initiatives.

“Our business strategies position UPS to improve operating leverage and many of our actions are already contributing to performance gains,” CEO David Abney said in a statement Oct. 24. “We generated another quarter of industry-leading margins and strong cash flow, and we are confident in the outlook for the business.”

David Abney

Abney

The Atlanta-based company earned $1.5 billion, or $1.73 a share, on revenue of $17.4 billion in the three months ended Sept. 30, compared with net income of $1.2 billion, or $1.44 a share, on revenue of $16.2 billion in the same period a year ago.

Results included a pre-tax charge of $97 million, or 9 cents a share, due to transformation-related initiatives that include development of new automated distribution facilities.

U.S. domestic package shipping volume grew 3.3% to 16.4 million packages, and revenue surged 8.1% to $10.4 billion in the third quarter of 2018.

International package volume slipped slightly to 3.1 million packages, but revenue grew 3% to $3.5 billion.

The company reported the biggest gains in its supply chain and freight segment, with revenue and operating profits increasing at double-digit rates.

UPS Freight revenue jumped 11.4% to $867 million in the third quarter from $778 million in 2017. Forwarding revenue was up 16.6% to $1.7 billion from $1.4 billion. Logistics revenue rose 7.3% to $790 million from $736 million.

“Supply chain and freight performance was outstanding this quarter,” Abney said. “UPS will continue to leverage our vast forwarding, customs and supply chain solutions to help customers expand their existing businesses and reach new markets.”

For the first nine months of 2018, UPS said net income was $4.3 billion, or $4.99 a share, on revenue of $52 billion, compared with net income of $3.8 billion, or $4.35 a share, on revenue of $47.6 billion in 2017.

Richard Peretz

Peretz

Looking ahead, UPS said it expects full-year earnings per share to be in the range of $7.03 to $7.37 with free cash flow of more than $5 billion.

“Improvements in revenue quality and our new, highly automated capacity give us confidence in a successful peak season for our customers and shareholders,” Chief Financial Officer Richard Peretz said.

In a conference call with investment analysts, Abney announced that UPS has acquired full ownership of its express delivery business in India, which is part of a strategy to target revenue growth in new markets.

He also welcomed a new agreement among the United States, Mexico and Canada on trade, saying it would lead to increased cross-border package shipments.

UPS ranks No. 1 on the Transport Topics Top 100 list of largest for-hire carriers in North America. UPS Supply Chain Solutions ranks No. 2 on the Transport Topics Top 50 list of largest logistics companies in North America.