United Parcel Service has today posted better-than-expected results, in an early positive sign of the company's overhaul following several difficult quarters of weak volumes.
Shares of the company rose over 7% in early trade on Wall Street, with rival FedEx also gaining. UPS shares are down about 28% since the start of the year.
The profit beat and the forecast signal progress in UPS' efforts to rebuild margins and stabilise volumes after a bruising year marked by tariff-related volume slump, the end of "de minimis" exemptions and rising costs.
The company projected revenue to be about $24 billion for the fourth quarter. Analysts on average were expecting quarterly revenue of $23.8 billion, according to data compiled by LSEG.
The return of fourth-quarter guidance, and one that tops Wall Street expectations, could prompt investors who had bet against the stock to buy back shares, said Evercore ISI analyst Jonathan Chappell, adding that expectations were "very low" going into the results.
The world's biggest parcel delivery firm is now leaning on rate hikes, cost cuts and a sharper focus on high-margin shipments to steady its business ahead of the crucial Christmas season.
The company has accelerated efforts to reduce the number of packages it delivers for its top customer, Amazon.com, to boost its profit margins.
The small package delivery business that UPS dominates is also under pressure from frozen corporate decision-making and subdued consumer sentiment as they adapt to the economic fallout from President Donald Trump's changing trade policies.
The peak holiday shipping and return season, when UPS daily average volumes can double, spans from November to the end of January.
UPS has been closing hundreds of facilities, slashing thousands of jobs and offering buyouts to its union drivers as part of its largest-ever overhaul aimed at reducing $3.5 billion in costs in 2025.
Like UPS, FedEx has been cutting costs to protect its margins, a move that helped it deliver quarterly results above Wall Street expectations in September, despite the removal of "de minimis" exemptions for China and Hong Kong, which reduced revenue by about $150m.
UPS reported an adjusted profit of $1.74 per share for the three months ended September 30, beating analysts' average expectations of $1.30.
The Atlanta-based company reported consolidated revenue of $21.41 billion, above expectations of $20.83 billion.
It reported an adjusted consolidated operating margin of 10%, up from 8.8% in the second quarter. That margin was 6.4%, down from 7% in the second quarter, in the domestic segment, its largest.
The company expects adjusted operating margin for the fourth quarter to be between 11% and 11.5%.
