UPS delivers upbeat revenue forecast after results beat, shares jump

Core Insights - United Parcel Service (UPS) exceeded analysts' profit expectations for Q3 and forecasted revenue above Wall Street's expectations for the holiday season, relying on price increases to counteract weak business-to-business demand in the U.S. [1][2] - UPS's shares rose 8.9% in premarket trading, while rival FedEx gained 2.5%. However, UPS shares have declined approximately 28% since the beginning of the year [1]. Financial Performance - UPS projected fourth-quarter revenue to be around $24 billion, surpassing analysts' average expectation of $23.8 billion [2]. - The company reported an adjusted profit of $1.74 per share for the three months ending September 30, exceeding analysts' average expectation of $1.30 [6]. - Consolidated revenue for UPS was $21.41 billion, above the expected $20.83 billion [6]. - The adjusted consolidated operating margin was 10%, an increase from 8.8% in Q2, while the domestic segment margin decreased to 6.4% from 7% in Q2 [7]. Strategic Initiatives - UPS is focusing on rate hikes, cost reductions, and prioritizing high-margin shipments to stabilize its business ahead of the holiday season [3]. - The company is reducing the number of packages delivered for its largest customer, Amazon, to enhance profit margins [4]. - UPS is undergoing a significant overhaul to cut $3.5 billion in costs by 2025, which includes closing hundreds of facilities and reducing its workforce [6]. Market Context - The peak holiday shipping season, when UPS's daily average volumes can double, runs from November to the end of January [5].