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(Reuters) -United Parcel Service Inc on Tuesday beat expectations for quarterly adjusted profit, as it prioritized shipments of high-margin parcels and kept a tight lid on costs amid a softening e-commerce environment.
Shares of the world’s largest parcel delivery firm were up 1.6% in premarket trading after UPS also raised its quarterly dividend by 6.6% to $1.62 and announced a new $5 billion share repurchase plan.
The company has benefited in recent quarters from a strong focus on moving parcels that bring in more money and its investments in automated bagging, robotic sorting of parcels, autonomous vehicles and other technologies.
Revenue per piece in its biggest and e-commerce-dependent domestic unit rose 7.2% for the fourth quarter ended Dec. 31 from a year earlier.
UPS has also controlled costs better than rival FedEx Corp (NYSE:FDX), despite having a unionized workforce.
In September, FedEx withdrew its forecast for fiscal year ending May 2023 after it was too slow to react to cooling global economies and the pandemic’s fading e-commerce shopping boom. It has since announced plans to slash costs by $3.7 billion this year.
Meanwhile, UPS forecast 2023 revenue between $97.0 billion and $99.4 billion, compared with analysts’ average expectation of $99.98 billion, according to Refinitiv data.
“(The) Full-year 2023 outlook appears to point to a resilient outcome despite the macro challenges,” BMO Capital Markets analyst Fadi Chamoun said in an earnings note.
For the fourth quarter, UPS reported an adjusted profit of $3.62 per share, above Wall Street’s expectations of $3.59 per share.
However, revenue for the quarter fell 2.7% to $27.0 billion, missing analysts’ average estimate of $28.09 billion, hit by softening e-commerce demand and a severe winter storm that affected several U.S. shipping hubs and delayed parcel delivery.
