UPS Posts Strong Gains as Package Volumes Swell--Update
October 28 2020 - 8:55AM
Dow Jones News
By Paul Ziobro
United Parcel Service Inc. said revenue rose nearly 16% in the
third quarter as its business continues to be boosted by the influx
of packages moving domestically and internationally during the
pandemic.
The Atlanta-based delivery giant said that delivery volumes rose
13.8% in its large U.S. domestic business in the latest period as
more people shopped online. Meanwhile, international shipments rose
12%, as a reduction in passenger flights that normally handle cargo
has given shippers fewer options.
Overall profit rose 11.8% due to the extra business, although
its U.S. business posted a decline in profit due to the added costs
and lower margins of delivering millions more packages to homes.
Shippers are also using lower-priced options, while higher-priced
services like next-day air decline in the U.S.
UPS Chief Executive Carol Tomé said that the business was
boosted primarily by strong demand from Asia and resurgent growth
from small and medium-size businesses shipping through its
network.
Both FedEx and UPS have been inundated with packages during the
pandemic as fewer consumers head to stores and more people shop
online. The boom in the number of packages has overwhelmed their
delivery networks and stretched delivery times, but the demand has
given the carriers leeway to impose fees and negotiate higher rates
from shippers.
The shipping volume is expected to remain robust during the
holiday season. Both FedEx and UPS have warned their largest
customers that there is no extra capacity available during the busy
shipping period, while other smaller carriers have stopped taking
new customers until next year.
In its earnings release, UPS Finance Chief Brian Newman said
that the company is working closely with its customers and "using
our proven tools to control volume and ensure the resiliency" of
its network during the coming peak season.
The setup has endeared the carriers to investors. FedEx shares
are up more than 80% this year, while UPS shares are up about
45%.
For the period ended Sept. 30, UPS posted earnings of nearly $2
billion, or $2.24 a share, compared with $18.3 billion, or $2.01 a
share, in the prior-year period. Excluding some restructuring
costs, UPS said per-share earnings were $2.28.
Analysts polled by FactSet recently expected the company to post
earnings of $1.90 a share on revenue of $20.2 billion.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
October 28, 2020 08:40 ET (12:40 GMT)
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