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UPS results hit by hurricanes, buoyed by overseas shipments
October 26, 2017 / 12:12 PM / 25 days ago

UPS results hit by hurricanes, buoyed by overseas shipments

(Reuters) - United Parcel Service Inc reported a slightly lower quarterly net profit on Thursday due to U.S. hurricanes and higher costs for Saturday delivery but lifted its full-year forecast, citing international strength and expectations for the crucial holiday season.

A United Parcel Service (UPS) truck on delivery is pictured in downtown Los Angeles, California October 29, 2014. REUTERS/Mike Blake/Files

The world’s largest package delivery company, often seen as a bellwether of U.S. economic activity, met Wall Street forecasts. It said revenue at its core U.S. domestic package service rose 3.9 percent from a year ago to $9.65 billion, driven by deliveries of online purchases.

Shares were down 0.1 percent at $118.48 in premarket trading.

UPS said it took a $50-million hit from hurricanes across the United States in August and September.

“UPS produced another solid quarter of financial performance, despite the impact of several natural disasters that slowed regional economic activity and damaged infrastructure,” CEO David Abney said in a statement.

The company said its international segment produced a record third-quarter operating profit of $627 million, up 8.9 percent, as a result of “broad, accelerated growth” in shipments helped by a strong international economy and new business following a June cyber attack on rival FedEx Corp’s Dutch unit.

Between U.S. Thanksgiving U.S. holiday and the new year, UPS will make 750 million deliveries worldwide, about 40 million more than last year, Chief Sales and Solutions Officer Kate Gutmann told analysts on a conference call.

Gutmann also said new and temporary facility expansions and technology investments made throughout the year should boost package capacity by about 6 percent.

Both UPS and FedEx have spent billions of dollars in upgrading their networks to handle rapidly rising e-commerce package volumes, particularly in the weeks leading up to Christmas, leaving investors frustrated over the expense.

UPS has also unveiled a number of new surcharges in recent years, seen as a way to manage the higher costs associated with e-commerce and unwieldy packages.

UPS said it would raise rates across many of its U.S. services by 4.9 percent from Dec. 24, and will also apply a new 2018 peak season surcharge for handling of large or awkward packages of $3.15.

The Atlanta-based company posted third-quarter net income of $1.26 billion or $1.45 per share, compared with $1.27 billion or $1.44 per share a year earlier, according to Thomson Reuters I/B/E/S.

Analysts had expected earnings per share of $1.45.

Overall, quarterly revenue rose to $15.98 billion from $14.93 billion. Analysts expected revenue of $15.6 billion.

The company said it expects full-year earnings per share in a range from $5.85 to $6.10. Analysts expect $6.01 per share.

Reporting by Eric M. Johnson in Seattle; Editing by Chizu Nomiyama and Nick Zieminski

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