United Parcel Services (UPS) dropped 3.4% in morning hours on Wednesday after the company reported third-quarter 2018 revenues that missed market expectations, despite earnings coming in line with estimates.
Consolidated revenues grew 7.9% to $17.4 billion from the same period last year. Average revenue yield increased 4%, with base-pricing gains in all categories. Net income was $1.50 billion or $1.73 per share compared to $1.25 billion or $1.44 per share in the prior-year quarter. Adjusted EPS grew 26.4% to $1.82.
In the US Domestic segment, revenues grew 8.1%, driven by higher demand for the company’s solutions as well as strong yield expansion. All products recorded increases in revenue, volume and revenue per piece. Daily shipments rose 3.3%, led by Next Day Air and Ground products while ground revenue per piece increased by 5.1%.
In the International segment, revenue grew 3%, and was broadbased across all regions. Export volumes increased across all regions, with Europe seeing a growth of 4.2% on top of the 25% growth in the third quarter of 2017.
The Supply Chain and Freight segment revenues rose 12%, helped by strategies focused on small and medium-sized customers. Revenues in the Forwarding business grew 17%, helped by revenue management initiatives and high-value solutions which generated yield improvement. Revenues in UPS Freight grew 11%, driven by higher pricing and heavier shipments.
For the full year of 2018, UPS expects adjusted EPS to be in the range of $7.03 to $7.37. The company raised its free cash flow guidance to over $5 billion for 2018. For the fourth quarter of 2018, adjusted EPS is expected to increase about 15%.