UPS has announced revenue growth of 7.0% for Q3 2017, to a total of $15.98bn. Operating profit increased only marginally, however, by 0.05% to $2.04bn, as the costs of e-commerce deliveries continues to weigh down profits in the company’s U.S. Domestic Package division.
Revenue in this segment increased by 3.9% to $9.65bn, with operating profit contracting by 5.6% to $1.2bn. UPS reported that Next Day Air daily shipments were up 8.0%, whilst Deferred Air daily shipments were down slightly. All in all, revenue per piece was up 2%, driven by base rate pricing and fuel surcharges, which were hiked to offset the changes in customer and product mix brought about by rising e-commerce volumes.
The UPS International segment had a good quarter, with revenues expanding 11.2% to $3.4bn, and operating profit rising 8.9% to $627m. UPS reported that these increases were driven by premium products, with export shipment growth of 19%. International Domestic daily shipments increased 5.7%, led by double-digit growth across several European countries, whilst the company also reported that its joint venture with S.F. Express in China had received regulatory approval, and would contribute to revenues in the near future.
UPS Supply Chain and Freight saw double-digit revenue growth and operating profit growth in the high single digits. The former increased by 13.4% to $2.97bn, whilst the latter rose 9.7% to $226m. The company noted that the top line expansion was a product of volume growth across its Freight Forwarding, UPS Freight and Coyote Logistics businesses, whilst noting that increased customer demand from the retail and aerospace sectors translated into revenue and profit growth within the Distribution unit.
“UPS produced another solid quarter of financial performance, despite the impact of several natural disasters that slowed regional economic activity and damaged infrastructure,” said David Abney, UPS chairman and CEO. “Our business segments adapted quickly to changing conditions this quarter, taking advantage of market opportunities while minimizing cost and service disruptions from recent events.”
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