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The Atlanta, Georgia-based company's net income for the third quarter declined sharply to $549 million from $970 million in the year-ago quarter. On a per share basis, earnings slipped 42.7% to $0.55 from $0.96 in the year-earlier quarter.
On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.52 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the preceding second quarter, UPS reported a net income that declined to $445 million or $0.44 per share from $873 million or $0.85 per share in the same quarter last year. Analysts expected earnings of $0.49 a share.
Revenues for the recent third quarter under review decreased to $11.15 billion from $13.11 billion last year, shy of analysts consensus estimate of $11.17 billion for the quarter.
For the preceding second quarter, net revenues declined 16.7% to $10.83 billion from $13 billion in the corresponding period last year
Segment-wise, U.S. Domestic Package revenues for the latest third quarter decreased 12.4% to $6.87 billion from $7.84 billion in the same period last year. UPS noted that revenue per piece declined 9.1% due to significantly lower fuel surcharges and lighter-weight packages and changes in product mix.
Revenue from International Package dropped 17.9% to $2.42 billion from $2.95 billion in the year-ago quarter. The company stated that revenue per piece dropped 21%, reflecting the overall impact of reduced fuel surcharges, currency and product mix.
Supply Chain and Freight revenue dropped 19.8% to $1.86 billion from $2.32 billion in the previous year quarter, with freight performance negatively impacted by increasingly competitive conditions in the freight environment.
The company's consolidated volume for the quarter totaled 927 million packages, down 2.4% from the same period last year. Average daily volume and revenue per piece declined 3.9% and 11.3%, respectively. Total operating profit for the quarter plunged 43.1% at $929 million from $1.63 billion in the year-earlier quarter. Operating margin for the quarter contracted to 8.3% from 12.4% in the same quarter last year.
Net income as a percentage of revenue for the quarter contracted to 4.9% from 7.4% in the year-ago quarter. Operating expenses for the quarter were $10.22 billion, down 10.9% from the year-earlier period.
Scott Davis, Chairman and Chief Executive Officer, UPS said, "I'm encouraged by the signs of economic recovery that are becoming apparent, although we still have a long way to go."
UPS indicated that a stabilizing economic environment led to improving volume trends during the quarter, while it's international business continued to increase market share. The company ended the quarter with $2.8 billion in cash and short-term investments.
For the nine-month period, the company's net income plunged 49.3% to $1.40 billion from $2.75 billion last year. On a per share basis, earnings dropped 47.9% to $1.39 from $2.67 in the same period last year.
Total revenues for the period decreased 15.1% to $32.92 billion from $38.80 billion in the same period last year.
Amongst others in the industry, Memphis, Tennessee-based package delivery giant FedEx Corp. (FDX | Quote | Chart | News | PowerRating), is slated to release its second quarter results on Thursday, December 17. On average, 18 analysts on consensus currently expect the company to report earnings of $0.85 per share for the quarter.
Looking ahead to the fourth quarter, UPS said it expects earnings to be in the range of $0.58 to $0.65 per share. Street analysts currently expect the company to report earnings of $0.63 per share for the fourth quarter, with expectations ranging between $0.54 per share and $0.75 per share.
In an October 1 research note, brokerage Deutsche Securities initiated its coverage on UPS with a 'Hold' rating. In mid September, Credit Suisse upgraded the company's stock to 'Neutral' from 'Underperform' and raised its price target to $61 from $48, citing valuation and the improving freight environment.
UPS is currently trading at $57.00, down $0.16 or 0.28%, on a volume of 0.20 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $37.99 - $59.63, with a three-month average volume of 4.00 million shares.
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