Business
UPS Exceeds Quarterly Forecasts with Strong Profit Increase
UPS exceeds profit forecasts in the third quarter of 2024 due to strong business developments and the sale of a subsidiary.
The US parcel service UPS reported unexpectedly high profits in the third quarter of 2024, exceeding analysts' expectations. The company announced a profit of just over 1.5 billion US dollars (around 1.4 billion euros), which represents an increase of approximately 37 percent compared to the previous year. Even without special effects, UPS was able to significantly surpass forecasts.
Despite the revenue growth of only one percent to 15 billion US dollars, the company slightly missed the revenue forecasts. The increase in revenue was primarily due to the sale of the subsidiary Coyote Logistics, which nevertheless led to an adjustment of the revenue forecast for the whole year. Group CEO Carol Tomé now expects revenue of around 91.1 billion US dollars for 2024, slightly below the previous estimate of 93 billion.
In the third quarter, UPS increased its operating profit excluding special effects by almost a quarter to two billion US dollars, while the adjusted Core EBITDA was raised to 31.6 to 31.8 billion US dollars—a slight improvement over the original forecast from 9.4 percent to 9.6 percent. Revenue in the software business grew by nearly ten percent to 6.5 billion US dollars, while the consulting division stagnated at 5.2 billion US dollars, and the infrastructure segment fell by seven percent to three billion US dollars.
These inconsistent results reflect UPS's ongoing realignment, which has been trying for years to focus more on software and services. Although the sale of Coyote Logistics has boosted profits in the short term, it negatively affects long-term revenue expectations.
Despite the mixed quarterly figures, investors reacted positively to the surprisingly high profits. In after-hours trading on the NYSE, UPS shares temporarily rose by 5.11 percent to $138.12. This demonstrates investors' confidence in the company's strategic measures, even though the complete implementation of the realignment remains a challenge.
With an eye on the coming year, UPS now faces the peak season of the year. In the weeks leading up to Christmas, parcel services like UPS, FedEx, and DHL will handle the most shipments, which will be crucial for annual revenues. Despite current challenges, the outlook remains optimistic as the company increases its efficiency and continues to invest in high-growth segments.
