United Parcel Service (UPS) -) posted stronger-than-expected third quarter earnings Wednesday, but lowered it full-year sales forecast following a series of disruptions and lost clients linked to its months-long labor dispute.
UPS said earnings for the three months ending in September were pegged at $1.57 per share, down 47.5% from the same period last year but just ahead of the Street consensus forecast of $1.52 per share. Group revenues, the company said, fell 12.7% to $21.1 billion, just shy of analysts' estimates of a $21.46 billion tally.
Domestic segment revenues fell 11.1% to $13.66 billion, UPS said, also revenue-per-piece, a key industry metric, rose 2%. International revenues, meanwhile, were down 11% to $4.27 billion while supply chain solutions sales fell 21.4% to $3.13 billion.
The group said weakening macro conditions hit demand over the third quarter, but noted that volumes diverted during its labor dispute with the International Brotherhood of Teamsters union is now returning to the network.
Looking into the final months of the year UPS said it sees revenues in the region of $91.3 billion to $92.3 billion, down from its prior forecast of $93 billion, with narrower margins in the region of 10.8% to 11.3%.
“While unfavorable macro-economic conditions negatively impacted global demand in the quarter, our U.S. labor contract was fully ratified in early September and volume that diverted during our labor negotiations is starting to return to our network," said CEO Carol Tomé.
"I want to thank all UPSers for their hard work and efforts during this challenging time and for once again providing industry-leading service to our customers,” she added. “Looking ahead, we are well-prepared for the peak holiday." Tomé added.
UPS shares were marked 5% lower in late-morning trading to change hands at $139.58 each, extending the stock's six-month decline to around 19%.
Related: FedEx shares leap after market share wins over UPS power earnings, forecast
UPS ended its labor dispute with the Teamsters in late August after it voted to to ratify a new five-year, $30 billion labor contract with the world's biggest package delivery group.
Part-time workers will earn $21 an hour under terms of the new agreement, a 35.5% increase from prior levels, while certain drivers will earn as much as $49 per hour, with maximum wages of $175,000 per year, by the end of the five-year term.
“This contract will improve the lives of hundreds of thousands of workers,” Teamsters President Sean O’Brien said in the statement. “Teamsters have set a new standard and raised the bar for pay, benefits, and working conditions in the package delivery industry.”
- Receive full access to real-time market analysis along with stock, commodities, and options trading recommendations. Sign up for Real Money Pro now.
