UPS reported strong second quarter 2017 earnings results earlier today.
Quarterly revenue for the Atlanta-based transportation and logistics bellwether at $15.7 billion was up 7.7% annually, and earnings per share at $1.58 was up 11% compared to last year and ahead of Wall Street estimates of $1.46. Operating profit was up 8.7% at $2.2 billion.
“We are pleased with our performance and progress,” said UPS CEO David Abney on the company’s earnings call. “We had balanced performance in all segments this quarter and positive operating leverage in the U.S. We remain focused on the efficiency initiatives [underway], and we see strong growth opportunities for UPS, and we continue to invest in the next generation UPS Smart Global Logistics Network and to implement strategic initiatives.”
Abney added that UPS also remains focused on investing heavily in new capacity and connected technology to capture the tremendous e-commerce and international growth opportunities it sees to fuel long-term profitable growth and enhanced shareholder value.
Individual segment results:
UPS CFO Richard Peretz said on the call that UPS earlier this year laid out its full-year 2017 plan, as well as its three-year target.
“At the mid-point of the year, the business is performing as expected, and we are pleased with our progress,” he said. “Net fuel year-over-year was a benefit. In 2016, fuel prices accelerated throughout the quarter from April to June and at the time we had a two-month fuel surcharge revenue delay and were unable to offset the increase in fuel prices. In early February, we adopted a two-week revenue lag. In addition, there were other fuel policy changes that increased the overall revenue-to-expense coverage ratio.”
Jerry Hempstead, president of parcel consultancy Hempstead Consulting, told LM that UPS’s strong quarterly performance serves as evidence it is hitting on all cylinders.
“The international strength was expected as FedEx was struck by a computer virus in its TNT operation and forced some shippers to migrate their business to UPS,” he said. “This will manifest itself more in Q3 as the TNT issues are ongoing. The longer the situation persists the greater the benefit to DHL and UPS. Amazon Prime Day was not in this quarter so that too will reveal its impact in Q3. Overall, it bodes well for UPS looking forward.”