UPS Inc. (NYSE:UPS) beat analysts’ bottom-line expectations in the third quarter, though revenue came in a little light compared to what analysts had forecast.
But the big news was made in the executive suite, where Jim Barber, the company’s chief operating officer (COO) and considered by many to be the heir apparent to CEO David Abney, announced his retirement as of the end of the year. Barber, 59, is a 34-year UPS employee. He has been COO since March 2018 and before that ran UPS’ international business for nearly five years.
The news came as a surprise to several who follow the company. Amit Mehrotra, an analyst for Deutsche Bank, called Barber’s retirement a “head scratcher” given that he “is young, well-regarded by the investment community, and considered the natural choice for the next CEO of the company.”
Abney, who had served as COO since 2007 when he was named CEO in September 2014, effectively sidestepped an analyst’s question about the timing of Barber’s departure as UPS – after spending years and billions of dollars to reconfigure its network to meet the demands of e-commerce volumes – was now starting to reap the operational benefits of the change.
UPS reported adjusted earnings per share of $2.07, a 13.7% increase over the same period last year, and two cents per share above analysts’ estimates from Barchart. The company’s operating profit grew by 20%, led by gains in the domestic segment, UPS said. Next-day air volume grew by 24%, second-day air grew by 17%, and ground volume grew by 7%, UPS said.
Net income, adjusted for charges associated with the re-engineering of UPS’ network to accommodate more e-commerce volumes, came in at $1.7 billion, the company said. Revenue was $18.3 billion, a 5% year-on-year increase but $30 million below analysts estimates, according to Seeking Alpha, a financial website.
UPS’ international segment posted an approximately 20% gain in operating profit, though revenue was essentially flat as weakness in the Asia-to-U.S. trade lane and certain European export markets weighed on the top line, the company said.
The company affirmed its full-year earnings per share of between $7.45 and $7.75 per share on an adjusted and diluted basis. The guidance assumed no further weakness relating to global trade uncertainty or declines in U.S. industrial production, the latter of which went negative for the first time in three years.