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UPS more than doubles 3Q profit
Friday - 10/25/2013, 5:26pm EDT
AP Business Writer
DALLAS (AP) -- A pickup in deliveries helped UPS more than double its profit from a year ago, when Big Brown took a hit from pension-restructuring costs.
UPS delivered more than 1 billion packages in the quarter, an increase of 4.6 percent, led by gains in international-export and U.S. ground shipments.
The company's U.S. business was helped by growth in online retailing, although higher interest rates caused financial-services companies to reduce next-day-air letter deliveries.
Overseas, volume rose due to growth in European exports. But Asia was flat as international customers continued to shift from priority air service to cheaper but slower delivery options. UPS has been trimming cargo flights from Asia.
"Our third-quarter results improved from the first half of the year even though our business faced similar market dynamics," Chairman and CEO Scott Davis said Friday on a conference call with analysts.
The company added that it plans to hire 55,000 workers to handle the crush of packages around the holidays -- about the same as the last two years. It expects peak-season daily volume to rise 8 percent over 2012. UPS believes that the busiest day will be Monday, Dec. 16, when it expects to pick up more than 34 million packages.
United Parcel Service Co. said that net income in the third quarter soared to $1.10 billion, or $1.16 per share. That was a penny better than analysts expected and an improvement over the $469 million, or 48 cents per share, that UPS earned a year ago. The 2012 figure would have been $1.06 per share without a $559 million pension-restructuring charge.
Revenue rose 3.4 percent to $13.52 billion, below analysts' forecast of $13.59 billion, according to FactSet.
Expenses declined 4.8 percent, as spending on compensation and benefits fell 8.1 percent without the big pension hit.
The company stood by its forecast of full-year earnings between $4.65 and $4.85 per share. Chief Financial Officer Kurt Kuehn said that was based on the assumption of "growth in the U.S. economy, but not outsized growth, and still-emerging recovery in Europe." Analysts expect $4.74 per share.
Delivery companies expect a pickup in business during the fourth quarter as they handle holiday gift shipments. This week, FedEx Corp. predicted volumes on peak December days will rise by double-digit percentages over last year.
UPS executives said that this year's late Thanksgiving holiday, Nov. 28, will be a challenge. Cramming holiday shipments into fewer days could make the network run more efficiently, they said, but it raises the stakes if there's a disruption.
"If you get an ice storm in Louisville one of those days, it's going to be hard to make up for," Davis said. UPS has a huge sorting and distribution center called Worldport at the Louisville, Ky., airport.
Shares of Atlanta-based UPS rose $1.12 to close at $95.61. They have gained 30 percent this year.
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