Tags: Financial Markets | ups | stock

UPS Shares Sink Despite Healthy 3rd Quarter Profit

a ups truck drives through a neighborhood
A UPS truck in a neighborhood in Orlando, Florida (Phelan M. Ebenhack/AP)

Wednesday, 28 October 2020 09:56 AM

United Parcel Service Inc beat profit expectations on Wednesday, but shares sank 5.7% as investors fretted over a margin squeeze from pandemic-fueled e-commerce deliveries.

The results from the world's largest delivery firm arrived as UPS, FedEx Corp, and other major package carriers get an early start to a holiday shipping rush that is certain to stress networks already running at near capacity.

Third-quarter average daily volume jumped 13.8% the key UPS domestic segment, which has been inundated with residential deliveries of everything from exercise equipment to snacks.

Operating profit in the company's domestic package unit fell 8.8% during the third quarter after it made more deliveries to far-flung — and less profitable — residential addresses and invested in expanding and speeding up service.

"Continued compression in domestic margins means that the debate over whether UPS has "fixed" e-commerce remains open," Bernstein analyst David Vernon said in a client note.

Atlanta-based UPS has raised prices and slashed costs in a bid to shelter earnings from a drop in lucrative shipments to businesses.

Chief Executive Officer Carol Tomé said productivity was below expectations during the latest quarter, as the pandemic and other factors led to higher employee turnover.

Net income increased 11.8% to $1.96 billion, or $2.24 per share, during the quarter.

Excluding items, UPS earned $2.28 per share, beating analysts' average estimate of $1.90 per share, according to Refinitiv data.

Revenue jumped 15.9% to $21.24 billion.

Last month, UPS said it would hire more than 100,000 workers for the winter holiday season, which retailers started more than a month ahead of time to avoid overwhelming the delivery network.

Shares in UPS fell $9.76 to $161.08 in early trading.

© 2020 Thomson/Reuters. All rights reserved.


   
1Like our page
2Share
StreetTalk
United Parcel Service Inc beat profit expectations on Wednesday, but shares sank 5.7% as investors fretted over a margin squeeze from pandemic-fueled e-commerce deliveries.
ups, stock
275
2020-56-28
Wednesday, 28 October 2020 09:56 AM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved