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UPS is leaning on rate hikes, cost cuts and a sharper focus on high-margin shipments to steady its business ahead of the crucial holiday season.LISA BAERTLEIN/Reuters
United Parcel Service beat analysts’ estimates for third-quarter profit and forecast revenue above Wall Street expectations for the holiday season on Tuesday, banking on price increases to offset soft business-to-business demand in the U.S.
Shares of the company jumped 16 per cent in premarket trading, with rival FedEx also gaining 4 per cent. UPS shares are down about 28 per cent since the start of the year.
The forecast and the profit beat signal early progress in UPS’ efforts to rebuild margins and stabilize volumes after a bruising year marked by tariff-related volume slump, the end of “de minimis” exemptions and rising costs.
The world’s biggest parcel delivery firm is now leaning on rate hikes, cost cuts and a sharper focus on high-margin shipments to steady its business ahead of the crucial holiday season.
The company is also reducing the number of packages it delivers for its top customer, Amazon.com, to boost its profit margins.
The peak holiday shipping and return season, when UPS daily average volumes can double, spans from November to the end of January.
The company projected revenue to be about US$24-billion for the fourth quarter. Analysts on average were expecting quarterly revenue of US$23.8-billion, according to data compiled by LSEG.
UPS reported an adjusted profit of US$1.74 per share for the three months ended September 30, beating analysts’ average expectations of US$1.30.
The Atlanta-based company reported consolidated revenue of US$21.41-billion, above expectations of US$20.83-billion.
