UPS reports solid Q3 growth
Despite sluggish cargo volumes worldwide, UPS experienced considerable growth in the third quarter of 2011, with total revenue rising 8 percent to $13.2 billion. The global logistics provider also delivered 965 million packages during this period, a 0.7-percent, year-over-year, increase.
UPS Chairman and CEO Scott Davis said these numbers demonstrate his company’s ability to stay profitable amid an onslaught of economic challenges.
“UPS produced another solid quarter of earnings growth against the backdrop of a deceleration in exports from Asia and a challenging global economic environment,” Davis said in a statement. “The resilience of our global model was evident during the quarter, and we remain confident in our ability to perform in both good and bad economies.”
Of all business segments, U.S. Domestic and Supply Chain & Freight posted the most growth in the third quarter, a company spokesman revealed. Operating margin for UPS’s U.S. Domestic sector increased to 13.1, compared to 2010’s adjusted results, and operating profit surged more than 10 percent.
Third-quarter results were mixed for the global logistics provider’s International Package segment, however. Although revenue jumped 14 percent, year-over-year, to $3.06 billion, operating margin slid from 15.7 percent to 13.4 percent.
The UPS spokesman attributes the revenue growth to higher fuel surcharges and base rates, in addition to the 6.5-percent improvement in export volumes. Unfortunately, he said, operating profit and margin for the segment fell in response to excess capacity caused by weak freight volumes on the Asia-to-U.S. trade lane. “They also were negatively impacted by product mix, higher fuel prices and currency fluctuations,” he stated.
Nevertheless, UPS officials are optimistic about the company’s third-quarter performance. “We are reiterating our 2011 guidance for UPS adjusted diluted earnings per share to a range of $4.15 to $4.40,” Kurt Kuehn, UPS’s chief financial officer, said in a statement. “UPS continues to deliver strong financial results in today’s global economic environment.”