What To Expect From UPS Q2 Earnings

UPS (NYSE:UPS) is set to announce its Q2 earnings on Friday, July 29th. The company posted revenues of $14.42 billion in the last quarter, which was 3.2% higher than the prior year quarter. Its earnings also increased 12.4% on a year over year (y-o-y) basis to $1.27 per share. Aided by a substantial decrease in the cost of fuel and the company’s efforts to improve its operational efficiency, its operating profits for the quarter increased by 9% y-o-y to $1.9 billion. Buoyed by these results, the company revised its full year earnings guidance to $5.70 to $5.90 per share.

Revenue Growth

The growth in the e-commerce spaces bodes well for UPS, since the company provides deliveries for most of the major e-commerce players. In the first quarter, total e-commerce sales increased 15.2% on a y-o-y basis to $92.8 billion. ^[1] Similar growth is expected in this quarter, which is likely to reflect the revenues for the U.S. Domestic Package segment. We expect lower fuel prices and the company’s operating efficiency measures to positively impact the bottom line this quarter.

During the quarter, UPS strengthened its operations both in the U.S. and internationally. The company expanded its San Antonio facility in order meet increased delivery loads in the upcoming months, and also opened a new facility in Texas that will cater to customers in the Greater Austin area. Globally, the company opened facilities in Belgium, Austria and Spain. These initiatives will help UPS strengthen its position in the European market, and withstand the challenges of the FedEx-TNT combined entity.

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1. U.S. Census Bureau Quarterly E-commerce Report, www.census.gov [↩]