DALLAS (AP) - United Parcel Service Inc. reported a slightly higher third-quarter profit of $1.26 billion despite a surprising drop in revenue.

DALLAS (AP) United Parcel Service Inc. reported a slightly higher third-quarter profit of $1.26 billion despite a surprising drop in revenue.

The courier's shares dropped almost 3 percent in trading before Tuesday's opening bell.

Falling fuel prices were a double-edged sword for the Atlanta-based package-delivery giant. Cheaper fuel reduced expenses but also took away revenue from fuel surcharges paid by customers, contributing to a 1.6 percent drop in operating profit in its U.S. business.

The quarter was helped by a 10 percent increase in international profit.

The results were mixed overall profit rose 3.5 percent and beat Wall Street expectations, but revenue fell 0.4 percent and missed analysts' forecasts.

UPS said it earned $1.39 per share. The average estimate of 25 analysts surveyed by FactSet and 12 analysts surveyed by Zacks Investment Research was for $1.37 per share.

Revenue, however, dipped to $14.24 billion. Analysts surveyed by FactSet expected $14.41 billion, while Zacks survey forecast $14.35 billion. Shipments rose 1.9 percent to 1.1 billion packages.

Chief financial officer Richard Peretz said the company expected full-year earnings to be at the higher end of its forecast of $5.05 to $5.30 per share, which would indicate an increase of between 6 percent and 12 percent over 2014.

The company is preparing for the peak holiday season, and expects to hire up to 95,000 temporary workers to help handle the load. On Monday, rival FedEx Corp. predicted that shipments will rise 12.4 percent between Thanksgiving and Christmas Eve.

Planning for the holiday rush can be difficult for the delivery companies. Last year, heavy spending to prepare for the season led to a drop in UPS' quarterly profit.

Earlier this month, UPS announced a series of price increases that will take effect during the rest of the year, including higher surcharges for heavy or oversized packages.

In trading before Tuesday's opening bell, UPS shares were down $2.88, or 2.7 percent, to $103.30 about 45 minutes ahead of the market open. The shares have fallen 4.5 percent since the beginning of the year, while the Standard & Poor's 500 index has risen nearly 1 percent. The stock has risen nearly 6 percent in the last 12 months.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UPS at http://www.zacks.com/ap/UPS

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