UPS Expecting Record Deliveries During Holiday Season
United Parcel Services on Thursday announced that it is expecting another holiday season with record breaking deliveries in 2016, but said a pension charge could hit its results for the fourth quarter.
UPS predicted that it would have volumes of over 700 million packages from Thanksgiving Day to New Year’s Eve, which would be up from its 2015 record of 612 million, with volumes daily that top 30 million packages on the 13 days that lead up to Christmas.
Like its rival FedEx, UPS has to manage the growing package volumes from e-commerce, while keeping its costs down.
The largest package delivery company in the world, which posted net profit for the third quarter that matched expectations by analysts, said that revenue increased across every one of its different services for the quarter, led by the domestic package business in the U.S.
Nevertheless, CEO David Abney said that economic growth globally remains just modest and UPS is seeing economic signals that are mixed from the industrialized economies.
Abney announced as well that UPS would be purchasing 14 Boeing 747-8 cargo planes with an option of buying an additional 14. The first two freighters are scheduled for delivery during 2017.
UPS placed its last aircraft order back in 2008 when 27 Boeing 767s were ordered with its last delivery of that order being in 2013.
Abney said that the new bigger aircraft were needed to handle the demand on its busiest routes between Asia and Europe, plus between the U.S. and Asia, freeing planes up for routes that are growing elsewhere.
The order gave new life to an aircraft that Boeing warned might be canceled.
UPS, based in Atlanta, Georgia, reconfirmed expectations for its per share earnings for the full year of between $5.70 and $5.90, but did warn that a year-end pension accounting adjustment might be material.
UPS posted net income for the third quarter of $1.26 billion equal to $1.44 a share, which was up from last year during the same quarter of $1.25 billion equal to $1.39 a share. Analysts were expecting per share earnings of $1.44.
Revenue for UPS was $14.9 billion compared to $14.2 billion for the same quarter one year ago. Analysts were expecting $14.73 billion in revenue.
Revenue for domestic packages in the U.S. increased 4.8%.