UPS has announced its financial results for the third quarter of 2014. It reported revenue of $8.69bn, an increase of 5.3% year-on-year. The company also recorded operating profit of $1.95bn, which represented an increase of 8.3% over Q3 2013. Accordingly UPS’s operating margin stood at 22.44%. UPS stated that these results benefitted from balanced growth across all three segments.
“The solid performance we delivered this quarter establishes our ability to stay ahead of market growth and generate positive operating leverage,” said David Abney, UPS Chief Executive Officer. “We continue making investments in technology and expanding our capabilities around the world to ensure we provide the long-term solutions that customers demand.”
US Domestic revenue increased to $8.7bn, up 5.3% over the third quarter 2013. Daily package volume improved by 6.9%, led by gains in UPS Ground and Deferred products up 7.7% and 5.9%, respectively. e-commerce continued to drive strong B2C growth, while B2B deliveries were also higher in Q3.
The segment’s operating profit was $1.3bn, up 7.8%. It experienced positive operating leverage as investments in new technology and capacity helped lower costs. Total revenue per package declined 1.5% as base rate improvements were offset by changes in customer and product mix. UPS SurePost shipments increased more than 50%, contributing to the mix change.
International revenue increased 5.5% to $3.2bn on daily package growth of 6.7%. Export products jumped 9.4% with gains from all regions of the world. Shipments out of Asia grew by 16% and Europe was up by 14%.
The segment’s operating profit improved by 10.3% to $460m. Revenue and cost initiatives implemented during the quarter contributed to the margin improvements. Currency-neutral revenue per package declined by 1.0% due to changing product mix and continued strength in shorter trade lanes. Non-premium products continue to outpace premium, putting pressure on yield.
Supply Chain and Freight revenue was up 7.4% to $2.4bn, resulting primarily from growth in the Distribution and UPS Freight business units. Operating profit was 7% higher at $215m, and operating margin was 8.9%.
Forwarding revenue was higher primarily due to increased International Air Freight tonnage which was aided by high-tech product launches and government sector gains. Operating profit improvements in North American Air Freight and Ocean Forwarding were more than offset by continued pricing pressure in International Air Freight.
Distribution revenue increased more than 10% over the same quarter last year. Strong demand from Healthcare and Retail sector customers contributed to the growth.
UPS Freight revenue increased 7.9% to $810m. LTL shipments were 4.7% higher and revenue per hundredweight improved 1.1%. Operating profit and margin expanded from the third quarter last year.
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