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UPS’s third-quarter profit was better than expected with proper cost control |

by WOOWinvest
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UPS’s third-quarter profit was better than expected with proper cost control |

United Parcel Service (UPS) announced its financial results for the third quarter of the fiscal year 2022 on Tuesday (25th) before the US stock market opened. Due to rising courier costs and appropriate cost control measures, the weak market conditions of e-commerce express delivery were offset, although revenue was slightly lower. In line with market expectations, but the profit performance was stellar, the company reiterated its full-year financial forecast.

Shares of UPS (UPS-US) rose 1.11% to $169.41 a share at the time of writing.

According to the financial report, Ubispeed’s third-quarter (as of 9/30) revenue increased by 4.2% year-on-year to $24.2 billion, slightly lower than analysts’ estimates of $24.3 billion, and adjusted earnings per share increased by 10.3% to $24.2 billion. Revenue rose 7.5% to $3.1 billion at $2.99, beating consensus estimates of $2.84.

By business, U.S. and international express revenue grew 8.2% and 1.7%, respectively, but supply chain solutions revenue fell 6.3% year-on-year, mainly due to a decline in air and ocean freight forwarding.

Ubispeed said weak global demand impacted revenue, but inflation pushed up freight prices to offset this. Taking into account inflation and service costs, the company plans to increase freight rates by 6.9% starting on December 27, the same price increase strategy as FedEx (FDX-US).

Looking ahead, Ubispeed reiterated its goal of $102 billion in full-year revenue this year, with an adjusted profit margin of 13.7% and an adjusted return on investment of over 30%.

In addition, Ubispeed lowered its capital expenditure forecast for this year from $5.5 billion to $5 billion, and the dividend payment is expected to be around $5.2 billion, although it is still subject to board approval, and at least $3 billion in stock buybacks.

Ubispeed also estimates that the business volume during the holiday shopping season at the end of the year will be lower than the same period last year, mainly due to changes in cooperation with major customers. The company said last quarter it would reduce its partnership with Amazon, though it still plans to hire at least 100,000 workers during the peak shopping season.

Ubispeed CEO Carol Tomé said that the macro environment is very volatile, but the company is controlling costs through strategies to achieve its financial goals for this year. Tomé said that as consumers return to their pre-pandemic spending habits, deliveries during the year-end shopping season will peak at the end of December.

Cowen analyst Helane Becker wrote in a report that Ubisoft’s third-quarter results were in line with the standards before the freight cycle slowed and were better at cost control than rival FedEx.

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