UPS beats profit estimates on higher package delivery prices

Oct 25 (Reuters) – United Parcel Service Inc. (UPS.N) reported stronger-than-expected quarterly adjusted earnings on Tuesday and reaffirmed its full-year guidance as higher delivery prices helped offset slowing e-commerce demand.

Delivery companies such as UPS and FedEx Corp (FDX.N) capitalized on smaller businesses and higher-paying enterprise customers to boost volumes and profits in the wake of lower e-commerce demand and lower domestic volumes.

After struggling to increase delivery capacity at the start of the pandemic, delivery providers now have the very important task of forecasting demand in a rapidly changing market, as having too many planes in the air and Delivery trucks on the road can drive up costs and sap profits.

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“The macroeconomic environment is very dynamic, but we are on track to meet our 2022 financial goals by executing our strategy and controlling what we can,” said UPS Chief Executive Carol Tomé.

Shares of Atlanta-based UPS rose about 1% in premarket trading as the company reaffirmed its full-year revenue forecast of about $102 billion and its adjusted operating margin approximately 13.7%.

Last month, rival FedEx withdrew its annual forecast, citing a sharp global slowdown at the end of August. Read more

UPS revenue per piece in its largest e-commerce dependent U.S. nationwide unit rose 9.8% for the quarter from a year earlier, even as demand weakened, with average daily parcel volumes for the segment down 1.5% in the quarter under review.

The world’s largest parcel delivery company’s quarterly revenue of $24.2 billion beat analysts’ estimates of $24.3 billion, as consolidated average daily parcel volumes fell by 2.1% to 22.9 million in the quarter.

UPS’s third-quarter adjusted earnings hit $2.99 ​​per share, beating Wall Street estimates of $2.84 per share.

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Reporting by Shivansh Tiwary in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Vinay Dwivedi

Our standards: The Thomson Reuters Trust Principles.

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