UPS Delivers on Growing Demand, Improved Pricing
27 Juillet 2017 - 3:16PM
Dow Jones News
By Ezequiel Minaya
United Parcel Service Inc. posted a stronger-than-expected
second quarter, paced by domestic business that squeezed more
profit from growing volume.
Revenue in UPS's domestic segment climbed 8.1% to $9.75 billion,
as the company benefited from growing demand for e-commerce
deliveries, while operating profit rose 13% to $1.4 billion.
Revenue per piece in the segment rose 3%, as the company benefited
from prices increases and higher fuel surcharges.
But shares in UPS, down 2% over the past 12 months, fell 2.8% to
$109.19 in premarket trading Thursday.
Investors are eager for indications that the Atlanta-based
company is making more money from delivering customers' online
orders and if there is space for raising prices.
UPS last month said it would charge more for packages delivered
during the busiest weeks before Christmas, and before that it said
it plans to ask shippers to help pay for the extra investments to
expand its holiday capacity, even if orders fall short.
The e-commerce boom is requiring delivery companies like UPS to
make additional investments to meet demands. The company already
said it plans to raise its capital-expenditure budget for the next
few years as it automates more facilities and orders larger cargo
jets.
The company said that in its latest quarter, average daily
package volume rose 5%. Revenue rose 7.6% to $15.75 billion, above
the expectations of analysts surveyed by Thomson Reuters, who
expected $15.47 billion. Average revenue per piece rose 1.7% to
$10.75.
Total operating expenses in the quarter jumped 7.5% as shipping
has generally become more expensive, in part because of the added
costs of delivering e-commerce orders to homes. The company posted,
however, a 8.7% rise in overall operating profit.
In total, UPS earned a profit of $1.38 billion, up 9% from a
year ago. On a per-share basis, the company said it earned $1.58,
up from $1.43. Analysts polled by Thomson Reuters had expected
$1.47 a share.
The company did warn, however, that it expects currency
headwinds and costs linked to strategic initiatives to pressure
results in the second half of the year. UPS reaffirmed its annual
guidance for adjusted earnings on a per-share basis to a range
between $5.80 and $6.10.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
July 27, 2017 09:01 ET (13:01 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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