UPS increased net income 3.5 percent to $1.26 billion in the third quarter of 2015 compared with the same period a year ago despite revenues remaining flat.
Total revenues at the parcel and logistics giant fell 0.4 percent to 14.24 billion for the quarter thanks to negative currency exchange rates and lower fuel surcharges, according to the company’s most recent financial statements.
UPS noted its revenues grew 1.8 percent year-over-year in the third quarter on a currency-neutral basis as the company was able to improve base rates through revenue management initiatives.
Diluted earnings per share at UPS grew 5.3 percent, from $1.32 per share in Q3 2014 to $1.39 per share in Q3 2015.
The company increased total consolidated volumes 1.9 percent to 1.11 billion packages. Average daily U.S. domestic package volumes were up 0.6 percent to 14.54 million, while average international volumes grew 0.3 percent to 17.1 million packages per day.
Revenues from U.S. domestic deliveries reached $8.86 billion, up 1.9 percent from the third quarter of 2014. UPS said lower fuel surcharge rates and changes in product and customer mix cut domestic revenue growth and resulted in lower per package revenues despite strong base rate improvements.
The company attributed the increase in domestic volumes primarily to faster growing premium air products. Deferred Air volumes jumped 13.2 percent to 1.14 million per day, while average daily UPS Next Day Air volumes grew 4 percent to 1.29 million, as more e-commerce shippers chose to upgrade to air services. Domestic ground volumes dipped 0.8 percent to 12.11 million a day on average, “as slowing industrial production contributed to the first year-over-year decrease in business-to-business (B2B) shipments this year,” said UPS. “Meanwhile, the pace of growth for all business-to-consumer (B2C) products increased this quarter.”
International package revenues in fell 7 percent to $2.96 billion despite the increase in volumes, but operating profits for the segment grew 10.2 percent to $507 million. Operating results in the international package division continued to benefit from revenue quality enhancements, network improvements and export volume growth, as growth in Europe transborder and U.S. inbound shipments outweighed a drop in Asia and U.S. exports, according to UPS.
Despite approximately $20 million in transaction fees related to its purchase of Chicago, Ill.-based Coyote Logistics, UPS’s and supply chain and freight division increased operating profits 1.9 percent to $219 million. Total segment revenues ticked up 0.1 percent to $2.42 billion for the third quarter.
The company expects its $1.8 billion acquisition of the asset-light truckload brokerage and third-party logistics provider, completed during the third quarter, to create more than $100 million of synergies going forward.
“Third quarter results reflect strong progress on our long-term initiatives despite uneven economic conditions,” UPS CEO David Abney said in a statement. “We remain committed to these strategies to support customers and improved shareowner value.”
“We are generating positive momentum as a result of the strong execution of our business units,” added CFO Richard Peretz. “This gives us confidence we will achieve the higher-end of our full-year earnings per share guidance.”
UPS projects 2015 full-year diluted EPS of $5.05 per share to $5.30 per share, an increase of between 6 to 12 percent compared with adjusted full-year 2014 results.