UPS profit tops estimates as dollar weighs on revenue

UPS reports mixed results

United Parcel Service posted a higher quarterly profit on Tuesday, despite its revenue being hurt by the strong U.S. dollar, and it reiterated its full-year earnings outlook.

UPS shares were down 2.7 percent at about $103.

The Atlanta-based shipping company said that without the impact of the U.S. currency on its results, revenue would have been up for the quarter. UPS also said that lower fuel-surcharge revenue had weighed on results.

"Third-quarter results reflect strong progress on our long-term initiatives despite uneven economic conditions," Chief Executive David Abney said in a statement.

UPS reported third-quarter net profit of $1.26 billion, or $1.39 per share, up 4 percent from $1.21 billion, or $1.32 per share, a year earlier.

Analysts, on average, expected earnings per share of $1.37.

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UPS said it expects full-year earnings per share to come in at the high end of its previously announced forecast of a range from $5.05 to $5.30.

Revenue for the quarter fell slightly to $14.24 billion from $14.29 billion a year earlier. Analysts had expected revenue for the quarter of $14.43 billion.

The company reported a third-straight quarter of operating profit growth in its international segment, posting an increase of more than 10 percent to $507 million.

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In a "Squawk on the Street" interview, CFO Richard Peretz attributed the increase to continued growth in cross-border shipments in Europe and network efficiencies as the company reduced the number of flights in Asia to compensate for softening economic activity on the continent.

In the United States, ground volume in UPS' business-to-business operations declined for the first time in 4½ years as the nation's industrial production contracted. Peretz said UPS expects industrial production to remain suppressed in the fourth quarter due to the strong dollar and weak overseas demand for U.S. manufactured goods.

However, he said, improvement in business-to-consumer deliveries, which include online shopping orders, are offsetting that decline.

"The B2C market is continuing to grow and we're participating in that in a big way," he told CNBC.

The company said on a currency-neutral basis, its revenue would have been up 1.8 percent. The strong U.S. dollar means that sales overseas are lower when translated into dollars.

CORRECTION: This version corrected that revenue for the year-ago quarter was $14.29 billion.

— CNBC's Tom DiChristopher contributed to this story.