UPS profits rise despite revenue drop in Q3

Although UPS reported that overall revenues fell 0.4 percent to US$14.2 billion during the third quarter, compared to the same period last year, the integrator said its operating and net profits both showed improvement as a result of “revenue quality enhancements” that began earlier this year.

The decline in revenues were blamed on currency exchange rates and lower fuel surcharges, adding that, on a currency-neutral basis, revenues had increased by 1.8 percent. Operating income climbed by 1.5 percent, year-over-year, to $1.98 billion for Q3, while net income for the period rose by 3.5 percent to $1.26 billion.

The International Package segment was the shining star of the quarter, showing a 10.2 percent growth in operating profit, y-o-y, to $507 million. Operating results, UPS said, benefitted from “revenue quality enhancements, network improvements and export volume growth.”

Its Supply Chain and Freight segment saw third-quarter revenues increase by 0.1 percent to $2.4 billion, while operating profit grew by 1.9 percent, y-o-y, to $219 million. The division saw a boost in revenues in Q3 thanks to the acquisition of trucking firm Coyote Logistics. “Coyote is expected to create more than $100 million of synergies,” UPS said.

“The freight forwarding business continues to benefit from revenue quality initiatives started earlier in the year,” UPS continued. “While tonnage and revenue were down, improvements to the network and pricing drove significant operating profit expansion.”

Total company shipments during Q3 increased by nearly 2 percent, y-o-y, to 1.1 billion packages, led by domestic air products. “Daily export shipments were up 1.2 percent over the prior year,” UPS said. “Growth in Europe trans-border and U.S. inbound shipments outweighed a drop in Asia and U.S. exports.”