United Parcel Service Inc (UPS, Financial) released its third-quarter earnings for 2023 on October 26, 2023. The company reported consolidated revenues of $21.1 billion, marking a 12.8% decrease from the third quarter of 2022. The consolidated operating profit was $1.3 billion, down 56.9% compared to the third quarter of 2022, and down 48.7% on an adjusted basis. Diluted earnings per share were $1.31 for the quarter, while adjusted diluted earnings per share of $1.57 were 47.5% below the same period in 2022.
Performance Overview
UPS's U.S. Domestic Segment reported a revenue decrease of 11.1%, driven by an 11.5% decrease in average daily volume, partially offset by a 2.0% increase in revenue per piece. The International Segment saw a revenue decrease of 11.1%, primarily driven by a 6.6% decrease in average daily volume and continued softness on Asia and Europe trade lanes. The Supply Chain Solutions segment reported a revenue decrease of 21.4% due primarily to market rate and volume declines in forwarding, partially offset by growth in healthcare.
Financial Outlook
UPS updated its full-year 2023 consolidated revenue and adjusted operating margin targets primarily to reflect global macro-economic uncertainty. The company now expects full-year 2023 consolidated revenue to be between $91.3 billion and $92.3 billion and a consolidated adjusted operating margin of between 10.8% and 11.3%. The company is maintaining its full-year planned capital expenditures target of about $5.3 billion and dividend payment expectations of around $5.4 billion, subject to board approval. UPS now expects full-year 2023 share repurchases to be approximately $2.25 billion. The effective tax rate for the full year is expected to be approximately 22%.
CEO Commentary
“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. 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,” said Carol Tomé, UPS chief executive officer. “Looking ahead, we are well-prepared for the peak holiday season.”
Financial Tables
The company's financial tables provide a detailed breakdown of the performance of each segment. The U.S. Domestic Segment reported a revenue of $13,660 M, with an operating profit of $571 M. The International Segment reported a revenue of $4,267 M, with an operating profit of $630 M. The Supply Chain Solutions segment reported a revenue of $3,134 M, with an operating profit of $142 M.
The company's financial outlook for 2023 includes a consolidated revenue target of between $91.3 billion and $92.3 billion, a consolidated adjusted operating margin of between 10.8% and 11.3%, and full-year 2023 share repurchases of approximately $2.25 billion.
Explore the complete 8-K earnings release (here) from United Parcel Service Inc for further details.
