UPS shares jump after Q3 earnings report
By Daniel Tyson
15:33, 26 October 2021
Higher shipping prices and an increase in e-commerce allowed United Parcel Service to top analysts’ expectations during the third quarter, the company said Tuesday.
UPS shares increased 7.1% to $218.56 during mid-morning trading. During 2021, the stock has increased 21%, while the Standard & Poor’ 500 index climbed 22%. Adjusted earnings came in at $2.71 per share in Q3, from $2.28 during the same time last year, a release from the Atlanta-based company said. The company's consolidated revenue was $23.2bn (£16.8bn). Analysts predicted Q3 earnings of $2.54 per share on increased revenue of 9.2% or $23.2bn in the quarter.
Since Covid hit last year, UPS raised prices to offset expenses of more home deliveries, which are growing faster than its more-profitable commercial business. The increase and focus on more-profitable deliveries resulted in a 13% gain for the company’s overall revenue per package, which offset a 2% decline in average volume, the release said.
Candid comment
The company’s CEO Carol Tome said during a conference call Tuesday that UPS is rethinking its package strategy, according to Bloomberg.
“We used to think that every package was the same. We don’t think that anymore,” she said. “We’re controlling the volume that comes into our network because we’re laser-focused on revenue quality.”
Profit margins
UPS has created a “better, not bigger” campaign. The campaign realigns the company’s past strategy of getting as many packages as it could despite the cost to focus more on profitable deliveries.
Tome, who took over last year, has stressed increased profit margins. In April, the company announced it would sell its freight business for $800m and last month UPS announced an agreement to acquire Roadie, described as a same-day delivery startup.
Amazon largest customer
Deliveries from the company’s key customers are decreasing as UPS controls the volume arriving at its network, including its largest customer, Amazon, Tome said.
However, she said, the percentage of the e-commerce giant's shipments with UPS is nearly identical to 2019 during the first three quarters of 2021.
Read more: UPS delivers the goods with second quarter earnings jump
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