United Parcel Service, Inc.(NYSE:UPS) recently announced its earnings for the second quarter that topped forecast due to improved margins. Chief Executive Officer, David Abney said that continuous strength of the U.S. dollar and impending rate increase by the Fed seems to be restraining some U.S. growth.
The package delivery company reported that its revenue dropped 1.2 percent to approx. $14.1 billion in the second quarter, as compared to last year. UPS stated that lower fuel surcharges and strong U.S. dollar affected growth.
The company’s key competitor FedEx Corp also blamed lower fuel surcharges for hurting revenue when it posted its quarterly results last month.
UPS announced that it earned $1.23 billion, or $1.35 per share for the second quarter, representing a surge of 10 percent from $1.12 billion, or $1.21 per share in the same period one year ago. Analysts had predicted earnings of $1.26 per share.
Looking forward, the company is anticipating profit in the range of $5.05 per share to $5.30 per share for the full year 2015, unchanged from April, however UPS added that earnings would be at the higher end of its guidance. Analysts are looking for earnings of $5.19 per share.
In spite of Q2 earnings beat, investors and analysts are waiting to see how the company performs in the holiday season during the fourth quarter. An analyst at Cowen & Co, Helane Becker stated in a note to clients that UPS must emphasize on overcoming the problems it faced last year during the peak shipping season in order to accomplish their targets for the year.
Price hikes and volume growth boosted margins at UPS’ international package segment. Though, strong dollar drove down sales for the segment by more than 6 percent. Revenue in the U.S. domestic package market jumped 1.6 percent.