UPS shares rally 7% as Q2 profit beats estimates

United Parcel Service

United Parcel Service Inc. (NASDAQ: UPS) announced its fiscal 2019 earnings ahead of the opening bell on Wednesday, July 24. Shares of United Parcel Service beat on both the top and bottom line, sending its shares up 4.50% to $110.01 in pre-market trade.

The Atlanta-based company said domestic revenue increased by 7.7% to $11.15 billion, beating analysts’ expectations of $10.82 billion. The shipping giant attributed the revenue growth to e-commerce-related service in the U.S, demand for Next Day Air Volume which climbed over 30%, and stronger demand in its international freight shipment operations.

The rise in demand for the UPS next-day services was due to faster delivery requirements from e-commerce shippers. International revenue decreased 2.7% to $3.51 billion, missing analysts’ expectations of $3.66 billion.

Freight and supply chain revenue fell 3.1% to $3.39 billion, missing expectations of $3.50 billion. Shares of the company have gained more than 16% since the beginning of the year, and was up $8.07, or 7.67% to $113.34 as of 12:47 p.m. ET.

UPS Earnings & outlook

United Parcel Service had net income $1.69 billion, or $1.94 per share in the second quarter, compared with $1.49 billion, or $1.71 per share, in the earlier-year period. Excluding one-time items, adjusted earnings grew to $1.96 per share, up from $1.94 per share in Q2 2018.

On average analysts surveyed by Refinitiv had been expecting adjusted earnings of $1.93 per share. Companywide revenue grew 3.4% to $18.05 billion. Analysts were expecting revenue of $17.97 billion, according to figures compiled by Refinitiv.

United Parcel Service expects adjusted EPS of $7.45 to $7.75 and adjusted free cash flow of $3.5 billion to $4.0 billion in 2019. The company also announced that it would expand its delivery service to seven days a week on Jan. 1

United Parcel CEO comments

“Our Transformation initiatives are generating greater efficiencies across the network and, when combined with our growth strategies, UPS achieved profit growth in all segments,” said David Abney, UPS chairman and CEO,

“We also announced a very extensive roll-out of new products and services such as UPS My Choice for Business, expanded UPS Access Points, and UPS Worldwide Economy, among others, for small- and medium-sized businesses, all designed to generate additional profitable growth,” Abney added.

United Parcel Service Inc profile

As the world’s largest parcel delivery company, United Parcel Service uses more than 500 planes and 100,000 vehicles to deliver on average million packages per day to residences and businesses around the globe.

Domestic package operations generate about 61% of consolidated revenue, and international package adds 20%; less-than-truckload freight delivery, freight forwarding, logistics services, and retail stores contribute another 19% of sales. – Warrior Trading News