UPS streamed its second-quarter 2018 earnings call this morning, reporting a 9.6 percent growth in total revenue, but a shrinkage in total operating profit of 13 percent, compared to the same period last year. The figure encompasses the company’s U.S. Domestic Package, International Package and Supply Chain & Freight sectors.
Dividing the operating profit figure by segment, UPS’ U.S. Domestic Package segment was the chief culprit of the decline, showing a 25 percent contraction, compared to the previous Q2, while international operating profit increased 8.4 percent, year-over-year, and the Supply Chain & Freight division experienced a mild 2 percent increase.
Addressing the contraction, Peretz said, “Year-over-year comp[arison]s for deferred air were tough this quarter,” but said that, over the last two years, [operating profit is] up 9 percent.” Manufacturing, technology and automotive sectors show “positive trends,” Peretz added.
“As David mentioned, we’re bringing on substantial capacity this year, which is driving additional expense,” Peretz continued and also pointed to higher fuel surcharges, pension expenses and project-related costs.
The company said it is experiencing “robust interregional growth in Asia and Europe,” where it is investing heavily in capacity and automation, which have already “enhanced transit time in thousands of lanes,” in the regions.
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