UPS Shows Gains Despite U.S.
UPS
(UPS) - Get Report
said its third-quarter net income rose 3.7%, as gains in its diversified businesses overcame the impact of a flat U.S. economy and slowing retail sales.
The package-delivery company said net income was $1.08 billion, or $1.02 a share, in the most recent quarter. Results included a one-time restructuring charge of $46 million, or 3 cents a share. Without the charge, per-share earnings were $1.05. Analysts had estimated $1.02.
Revenue rose 4.7% to $12.21 billion and was in line with estimates.
Looking ahead, domestic "market trends are starting to improve slowly,
although retail sales growth is expected to remain weak and is a wild card going into the holiday season," Chief Financial Officer Scott Davis said on a conference call.
In terms of domestic volume, he said, "it will be the slowest fourth-quarter growth in the last four years." However, UPS believes its fourth-quarter results will reflect continued strength in international operations and further gains in supply chain and freight.
For the year, the company expects adjusted earnings between $4.13 and $4.19 a share. Analysts are looking for $4.15.
In the third quarter, net profit in the domestic package business was flat at $1.23 billion on revenue of $7.55 billion. The international package division had an operating profit of $428 million, up 10.6%. In supply chain and freight, where Davis cited a turnaround, UPS had an adjusted operating profit of $98 million, reversing last year's loss of $19 million.
Meanwhile, outgoing CEO Mike Eskew said UPS plans a one-time $6.1 billion pretax payment in the fourth quarter to the Teamsters Union Central States Pension Fund.
The payment, with an after-tax impact of $3.9 billion, would enable UPS to withdraw from the fund and to establish a single pension plan. It results from a tentative agreement on a new contract, now out for ratification by 238,000 workers, that would expire in 2013.
Shares of UPS were up 58 cents at $75.67.