United Parcel (UPS.US) returns to revenue and profit growth after two years, raises full-year profit guidance

United Parcel (UPS.US) has reported its first revenue and profit growth in two years, driven by increased volumes, higher package profits and stable labor costs. As of writing, United Parcel's shares rose more than 7% before the market opened on Thursday. The company's third-quarter revenue rose 5.6% year-on-year to US$22.2bn, in line with analysts' consensus estimates. By business segment, domestic US package revenue was US$14.45bn, up 5.8%; international package revenue was US$4.411bn, up 3.4%; and supply chain and freight revenue was US$3.384bn, up 8.0%. Adjusted operating profit was US$1.983bn, up 22.8% year-on-year; adjusted operating margin was 8.9%, up from 7.7% in the same period last year. Adjusted net profit was US$1.503bn, up 11.7%; adjusted EPS was US$1.76, topping analysts' consensus estimate of US$1.63 and up from US$1.57 in the same period last year. The company's adjusted EPS grew for the first time in six quarters after six consecutive quarters of year-on-year declines, according to the earnings report. The package transportation industry has been under pressure from weak air freight demand and customers fed up with inflation opting for cheaper sea freight, squeezing profits in air freight. United Parcel's CEO Carol Tomé said: "After 18 months of challenges, our company has regained revenue and profit growth." The company highlighted increases in daily domestic volumes, prices and air freight volumes in the US. Looking ahead, United Parcel expects revenue to be about US$91.1bn in 2024, lower than its previous expectation of US$93bn; it expects adjusted operating margin to be 9.6%, higher than its previous expectation of 9.4%. In addition, the company expects full-year capital expenditure to be about US$4bn and its stock repurchase target to be about US$5.4bn.