UPS Reports Mixed Q3 Results with Revenue Growth and Increased Operating Profit

United Parcel Service, Inc. (UPS) reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting a mixed performance in revenue and profitability compared to the previous fiscal period.

For the third quarter of 2024, UPS generated consolidated revenue of $22,245 million, a 5.6% increase from $21,061 million in the same period of 2023. However, for the nine months ended September 30, 2024, total revenue decreased slightly to $65,769 million from $66,041 million year-over-year. The U.S. Domestic Package segment saw revenue rise to $14,450 million in Q3 2024, up from $13,660 million in Q3 2023, while year-to-date revenue fell marginally to $42,803 million from $43,043 million.

Operating profit for the third quarter increased significantly to $1,985 million, a 47.8% rise from $1,343 million in Q3 2023. However, for the nine-month period, operating profit decreased to $5,542 million from $6,664 million in the prior year. Net income for Q3 2024 was $1,539 million, up from $1,127 million in Q3 2023, while year-to-date net income fell to $4,061 million from $5,103 million.

UPS's operating expenses for Q3 2024 were $20,260 million, reflecting a 2.7% increase from $19,718 million in Q3 2023. Year-to-date operating expenses rose to $60,227 million from $59,377 million. The increase in expenses was attributed to higher pickup and delivery costs, as well as wage rate increases for the union workforce.

Strategically, UPS completed the divestiture of its truckload brokerage business, Coyote, on September 16, 2024, for cash proceeds of $1.002 billion, resulting in a pre-tax gain of $156 million. The company also announced plans to acquire Frigo-Trans, a healthcare logistics provider in Germany, expected to close in 2025. Additionally, UPS expanded its residential Saturday delivery service to eight major European markets and enhanced its digital access program, surpassing six million merchants globally.

The company is actively pursuing its Transformation 2.0 strategy, which has incurred costs of $785 million to date, with expected savings of approximately $400 million. The "Fit to Serve" initiative, which involves a workforce reduction of about 12,000 positions, has resulted in accrued separation costs of $101 million.

As of September 30, 2024, UPS reported cash and cash equivalents of $5,855 million, a significant increase from $3,206 million at the end of 2023. Total debt stood at $22,139 million, with total equity for controlling interests at $16,857 million, down from $17,306 million at the end of 2023. The effective tax rate for Q3 2024 was 19.4%, up from 11.1% in Q3 2023, attributed to non-deductible expenses and changes in tax positions.

Overall, UPS's performance reflects a combination of revenue growth in certain segments, strategic divestitures, and ongoing transformation initiatives, while facing challenges in profitability and market conditions.