United Parcel Service raises its forecasts
The global package-delivery company lifted its outlook on October 27, the date set for its third-quarter results.
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The global package-delivery company lifted its outlook on October 27, the date set for its third-quarter results.
United Parcel Service (UPS), the global package-delivery and logistics company, raised its annual revenue and profit forecasts on October 27 after better-than-expected third-quarter earnings. Chief executive Carol Tomé said healthcare revenue reached $3 billion in the latest quarter as UPS focuses on higher-margin shipments.
The forecast increase coincided with the results day anticipated in MarketBeat’s October 20 preview. That preview put the likely release before the market opened on October 27 and scheduled an earnings call for 8:30 a.m. Eastern time that day. The higher annual forecasts describe expected performance, not completed full-year results.
In an October 27 interview with Reuters, Tomé estimated that logistics work associated with data centres represents a $15 billion annual opportunity. That is her estimate of the opportunity, not UPS revenue. She said UPS’s data-centre revenue was growing quickly but remained below healthcare revenue, and declined to disclose a figure.
UPS’s work includes flying in advanced microprocessors, arranging ocean shipments of equipment, storing goods and delivering parts to data-centre project sites. Tomé said demand could last for decades because completed facilities would continue to need parts and equipment.
The company is seeking more profit from fewer, higher-margin shipments. It has consolidated facilities to cut costs and invested in temperature sensors, package scanning and tracking. Its healthcare work includes transporting temperature-controlled chemotherapy drugs and other cancer treatments.
UPS and rival FedEx are competing for higher-margin deliveries while moving away from low-margin or unprofitable shipments. FedEx is scheduled to report quarterly results after the market closes on October 28.
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