United Parcel Service Inc. surged toward a record as the courier rode pandemic-related demand for e-commerce deliveries, health-care equipment and exports from Asia to post results that blew past estimates.
Revenue jumped 13% to $20.5 billion in the second quarter, surprising analysts, who had predicted sales would drop from a year earlier to $17.5 billion. Adjusted earnings climbed to $2.13 a share, the company said in statement. That was about double analysts’ projections, based on the average of estimates compiled by Bloomberg.
The strong results were fueled by “changes in demand that emerged from the pandemic, including a surge in residential volume, Covid-19 related health-care shipments and strong outbound demand from Asia,” Carol Tomé, who took over as chief executive officer on June 1, said in the statement.
Couriers such as UPS and FedEx Corp. have been in overdrive to keep up with residential deliveries and the need to move personal protection equipment to hospitals since the new coronavirus swept the world this year. Both companies applied peak-season type surcharges on large customers to cope with the demand and help pay for extra expenses to keep workers safe and sorting hubs free of the virus.
UPS soared 11% to $137.50 before the start of regular trading in New York, on pace to top its all-time closing high of $134.09, set in early 2018. The stock had climbed 5.7% this year through Wednesday, while the S&P 500 rose less than 1%.
U.S. average daily volume surged 23% to 21.1 million packages a day in the second quarter. That was driven mostly by a 65% jump in residential deliveries.
Still, the increase in home delivery weighed on domestic adjusted profit margin, which fell to 9.3% from 11% a year earlier. That’s because residential service has fewer packages per stop than commercial and requires drivers to travel more between locations.
