UPS meets profit forecast, 2016 outlook unchanged

Reuters

United Parcel Service on Thursday reported a higher quarterly net profit that met analyst expectations and reiterated its full-year 2016 earnings outlook.

UPS also warned its fourth-quarter results could be affected by a year-end mark-to-market pension accounting adjustment.

The world's largest package delivery company said revenue rose across all of its services, led by its key U.S. domestic package business. Like rival FedEx, UPS is entering its crucial holiday peak season where it must manage rapidly growing e-commerce package volumes while keeping costs down.

UPS said it expects record peak volumes of more than 700 million packages between Thanksgiving and New Year's Eve, with daily volumes expected to hit more than 30 million packages on 13 days leading up to Christmas.

During a call with analysts, UPS Chief Executive David Abney said global economic growth remains modest and the company is seeing 'mixed economic signals” from the world's industrialized economies.

Abney also told analysts UPS will purchase 14 Boeing 747-8 jumbo freighters, with options to buy 14 more. The first two aircraft should be delivered by the end of 2017.

Some 1,200 Teamsters-represented mechanics and other workers who service UPS' fleet of jet aircraft are voting whether to authorize a strike against the company. After three years of talks, health care benefits are the main stumbling block for a new contract for workers at Teamsters Local 2727.

UPS posted revenue of $14.9 billion, versus $14.2 billion in the same period last year. Analysts expected revenue of $14.73 billion.

Revenue at UPS' cornerstone U.S. domestic package service rose 4.8 percent, with daily package volumes up 5.7 percent. Revenue per package at the unit was 0.9 percent higher than in the third quarter of 2015.

UPS said it still expects full-year earnings per share within a range from $5.70 to $5.90.