UPS recently revealed that its third quarter revenue for 2011 increased 8 percent to $13.2 billion over the same three-month period last year.The international shipping giant also said that its stock achieved a diluted earnings per share of $1.06, which represented a 14 percent improvement over the adjusted earnings for the third quarter of last year.
According to a release from the company, the earnings were largely driven by a considerably improved operating margin in UPS U.S. Domestic and Supply Chain & Freight sectors. Domestic margin increased by 13.1 percent and the Supply Chain & Freight segment went up 10 percent; both figures are in comparison to last year.
Dow Jones Newswires reports that UPS experienced a 5.1 percent net earnings increase over the previous quarter despite the fact that volume was stagnant due to lessening demand from the U.S. and fewer exports from Asian countries. Specifically, domestic shipping volume averaged about 12.74 million packages a day in the third quarter of 2011, up just a tick from 12.73 million seen in the July-September period in 2010.
Scott Davis, UPS chairman and CEO, said in the company release that the third quarter results were encouraging, particularly due to the inhospitable financial environment in which they were achieved.
"UPS produced another solid quarter of earnings growth against the backdrop of a deceleration in exports from Asia and a challenging global economic environment," Davis said. "The resilience of our global model was evident during the quarter and we remain confident in our ability to perform in both good and bad economies."
Reuters reports that another factor that allowed the Atlanta-based company to post strong quarterly results was the fact that it had not only increased its prices but also achieved business cost reduction.
According to the news provider, the company is well positioned to handle the increased shipping demands of the holiday season, which will have a "meaningful" impact on fourth quarter results, Davis told reporters on a conference call. This will be especially true if retailers with low inventories see increased demand from customers and need things shipped quickly.
"Over the last month or so, we are starting to see better economic numbers, so there is more optimism out there, and that could turn things around," Davis said in the call. "We are still expecting a slow-growth economy, but I don't think it is as negative as people were thinking two and three months ago."
FedEx said earlier in October that it expects the holiday season to see a significant rise in shipping. Specifically, the company believes that shipments will increase 12 percent in the period between Thanksgiving and Christmas, which is a crucial time for those in the package industry, according to Dow Jones.
Kurt Kuehn, UPS's chief financial officer said that the company's 2011 guidance remained unchanged, and reiterated the company's position.
"We are reiterating our 2011 guidance for UPS adjusted diluted earnings per share to a range of $4.15-to-$4.40," he said. "UPS continues to deliver strong financial results in today's global economic environment as customers benefit from the logistics solutions that only UPS offers."
According to Reuters, UPS - along with FedEx - is considered a bellwether for the economy due to the large volume of packages that the companies handle. UPS handles goods worth 6 percent of America's gross domestic product and 2 percent of the world's GDP each year, reports the news provider.
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