UPS Q3 revenue up 4% at $24bn on higher prices

NYSE-listed UPS reported a 4 percent increase in consolidated Q32022 revenue at $24.2 billion on increase in revenue per piece in both the domestic and the international segments.

"Consolidated operating profit was $3.1 billion, up 7.5 percent compared to the third quarter of 2021 and up 6 percent on an adjusted basis. Diluted earnings per share were $2.96 for the quarter; adjusted diluted earnings per share of $2.99 were 10.3 percent above the same period in 2021," says an official release.

"I want to thank UPSers around the world for their unstoppable spirit and for continuing to deliver outstanding service to our customers," says Carol Tomé, chief executive officer, UPS. "The macro environment is very dynamic but we are on track to achieving our 2022 financial targets by executing our strategy and controlling what we can control."

Domestic revenue up 8%
Domestic revenue increased 8 percent to $15.4 billion on nearly 10 percent increase in revenue per piece. "One-third of growth rate increase came from base pricing, one-third was from changes in fuel price-per-gallon, and one-third was from the combination of mix and fuel pricing actions," Brian Newman, Chief Financial Officer, UPS told analysts during a presentation after the announcement of the results.

3Q Average daily volume (ADV) declined 1.5 percent but ADV growth rate improved relative to 1H22 as volume from 2Q wins entered the network, Newman added.

Operating profit was up 21 percent to $1.7 billion from $1.4 billion in Q32021. "Operating margin was 10.8 percent; adjusted operating margin was 11 percent."

International revenue up marginally
International segment revenue was up marginally (nearly 2 percent)to $4.8 billion on over 6 percent increase in revenue per piece. "Operating margin was 20.8 percent; adjusted operating margin was 20.9 percent." Operating profit, however, declined 5 percent to $997 million.

Supply chain solutions revenue declined over 6 percent to nearly $4 billion "due to declines in air and ocean freight forwarding, partially offset by growth in our logistics and healthcare businesses."

Reaffirms 2022 outlook
For 4Q2022, domestic revenue growth is likely to be ~4.5 percent with an adjusted operating margin of 12.4 percent, says Newman. International revenue growth is likely to be relatively flat with an adjusted operating margin of 21.5 percent, he added.

For the full year 2022, UPS has reaffirmed its consolidated financial targets of revenue of around $102 billion, an adjusted operating margin of about 13.7 percent and adjusted return on invested capital above 30 percent.

For the year, the company now expects capital expenditures to be around $5 billion. Dividend payments are expected to be around $5.2 billion, subject to board approval, and share repurchases are projected to be at least $3 billion.