Saying UPS expects a “sluggish” holiday season, Chief Financial Officer Kurt Kuehn said he does not expect a significant rebound from “steady-as-she-goes” economic conditions in time for Christmas.
“It will be a solid holiday season, but not exciting,” he said, “kind of like the economy now.”
People are continuing to shop more online, and customer shipments from online sales currently account for about 40 percent of UPS’ deliveries. During the holiday season, those shipments will account for more than half of what UPS delivers.
The Sandy Springs-based logistics company saw a decline in business-to-business shipments in its third quarter, though its total number of shipments rose by 2.9 percent over the same period last year, to 15.5 million packages a day, due to online shopping.
The results for the quarter — UPS made $469 million, a 56.3 percent decrease from the $1.072 billion it made in the third quarter a year ago — were “by no means” a home run, said Kevin Sterling, senior vice president for BB&T Capital Markets.
But the tone of executives was less pessimistic about the future, Sterling said, and their comments were more positive. Aircraft that had been parked in the second quarter were being filled with shipments out of China, he said.
Though Kuehn said UPS could not speak about specific customers, he said product launches accounted for a large amount of export volume out of Asia. The iPhone 5 went on sale in late September. Shipments from Europe remain flat to slightly negative, Kuehn said, but small-package shipments across European borders are up slightly.
“We’re pleased the company performed well in a tough environment,” Kuehn said.
In a conference call Tuesday, UPS Chairman and CEO Scott Davis said business investment in the U.S. remains slow. Still, he said, lower fuel costs and interest rates correlate to more positive U.S. consumer behavior, even as European demand is down.
UPS updated its guidance for the fourth quarter, narrowing the window of its expectations by raising its minimum per-share prediction and saying that it had more clarity for the end of the year. The company took an after-tax $559 million noncash charge related to pension restructuring in the quarter.
About the Author
