Published - October 25, 2022 @ 03:25 PM (EET)
Shipping giant United Parcel Services (NYSE:UPS) reported third-quarter earnings on Tuesday that came in better than expected as higher delivery prices offset softening e-commerce demand.
Though UPS said the macro environment is very dynamic, revenue during the quarter rose 4.2% year-over-year to $24.2 billion, just shy of analysts' estimates of a $24.32 billion tally.
The package delivery company also affirmed its full-year outlook and said it is on track to achieve its 2022 financial targets.
In the news release, CEO Carol Tomé said,
"I want to thank UPSers around the world for their unstoppable spirit and for continuing to deliver outstanding service to our customers."
Revenue in US domestic packages rose 8.2% to $15.4 billion, while international numbers were up 1.7% to $4.8 billion.
Operating profit margins came in at 13%, up 12.8% from the year-ago quarter. Meanwhile, supply chain solutions fell 6.3% to $3.98 billion due to declines in air and ocean freight forwarding.
UPS expects full-year revenue of $102 billion and an adjusted operating margin of roughly 13.7%. For 2022, UPS cut its capital expenditures outlook from $5.5 billion to $5.0 billion.
WHY IT MATTERS
In the prior quarter, the shipping giant struggled with declining volumes, with the lower shipments attributed to less business with large clients like Amazon (NASDAQ:AMZN).
Moreover, following a surprise quarterly update that pegged fiscal first-quarter earnings at $3.44 per share, UPS rival FedEx Corp (NYSE:FDX) pulled its full-year earnings guidance, well below forecasts of $5.14 per share.
Citing weakening demand and fears of a worldwide recession, delivery firms such as UPS and FedEx have banked on higher-paying small businesses and enterprise customers to drive volumes and earnings.
Shortly after the results, UPS stock was up 0.5% in premarket trading. In contrast, the S&P 500 and Dow Jones Industrial Average futures were down 0.5%, respectively.
