- UPS delivered an average of 21.1 million packages daily in the second quarter, it said Thursday, a 22.8% increase from last year.
- For the three months ended June 31, the logistics giant’s financials topped investor expectations.
- The surge in home deliveries during the coronavirus pandemic has helped pad against a decline in business-to-business shipping.
The coronavirus-induced boon for home deliveries helped UPS top Wall Street’s estimates for the second quarter.
On Thursday, the logistics giant reported a 13.4% surge in revenue for the three-month period ended June 31, sending shares soaring higher in early trading. Profits hit $1.77 billion, or $2.03 per share, up from $1.69 billion, or $1.94 per share, in the same period of 2019.
The earnings beat was largely fueled by a 22.8% uptick in average daily shipment volumes, which hit 21.1 million. As the virus continues to ravage the United States and its economy, UPS executives said they’re unable to fully predict what will happen to their business in the second half of the year but remain optimistic.
“We expect demand for residential packages will continue in the U.S. and around the world,” CFO Brian Newman said on a conference call with analysts, while warning that US margins could slip as the country fails to stop the spread of the virus. “We also expect Asia outbound demand and yields to be positive year-over-year, but will continue to moderate versus the second quarter.”
The surge in home deliveries spurred by droves of workers now stuck at home helped to pad against a 21.9% decline in business-to-business shipments, UPS said.
Analysts say the impressive results prove that shippers across the board, not just UPS, have an opportunity to raise prices since demand is clearly not going anywhere.
“With the parcel delivery demand at record levels,” JPMorgan analyst Brian P. Ossenbeck wrote to clients Thursday, “expectations are rising for the private carriers to gain pricing power.”
Shares of UPS are up 24% since the beginning of the year while benchmark market indices remain flat.
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