2006 Earnings Climb 11.2%; International Profits Exceed $1.7 Billion
ATLANTA, Jan. 30, 2007 - Led by a strong performance in its
international operations, UPS (NYSE: UPS) today reported net income of $1.13
billion and a 10% increase in diluted earnings per share to $1.04 for the fourth
quarter ended Dec. 31, 2006.
For the full year of 2006, revenue rose almost 12%; operating profit
increased 8%, and earnings per share climbed 11.2% to $3.86. The international
business reached new heights, reporting more than $1.7 billion in operating
profit. The company set a new record for package volume in 2006, delivering
almost 4 billion packages or an average of 15.6 million per day.
"UPS had a very good year in 2006," said Chairman and CEO Mike Eskew. "We
posted new highs in revenue, operating profit and earnings per share. We
finished the year with a well-executed peak season, and strong execution will
continue to be critical for us as we move forward in 2007."
| Consolidated Results |
4Q 2006 |
4Q 2005 |
| Revenue |
$12.6 B |
$12.0 B |
| Operating profit |
$1.8 B |
$1.7 B |
| Operating margin |
14.3% |
14.3% |
| Average volume per day |
17.3 M |
16.8 M |
| Diluted earnings per share |
$1.04 |
$0.95 |
The fourth quarter produced solid earnings growth despite a slowing U.S.
economy. Consolidated average daily package volume rose 3.3%, or 558,000
additional packages each day. Pricing remained firm around the globe.
Consolidated average revenue per piece increased 2%.
Cash Position
UPS ended 2006 with nearly $2 billion in
cash and marketable securities. For the year, it also:
- Generated cash from operations of $5.7 billion.
- Purchased 32.6 million shares, reducing total shares outstanding by 2.5%.
- Paid $1.6 billion in dividends.
- Invested $3.1 billion in capital expenditures.
| U.S. Package |
4Q 2006 |
4Q 2005 |
| Revenue |
$8.13 B |
$7.82 B |
| Operating profit |
$1.30 B |
$1.24 B |
| Operating margin |
15.9% |
15.8% |
| Average volume per day |
15.4 M |
14.9 M |
Ground volume posted a healthy 3.6% increase in the quarter. Next Day
Air® volume declined marginally and deferred volume was flat against
strong prior-year results.
The company did an excellent job of executing on its holiday peak season
plan, with deliveries exceeding 22 million on two days. Package delivery volume
exceeded 20 million a day on seven days during the 2006 peak compared to five
days the prior year.
| International Package |
4Q 2006 |
4Q 2005 |
| Revenue |
$2.44 B |
$2.22 B |
| Operating profit |
$514 M |
$431 M |
| Operating margin |
21.0% |
19.4% |
| Average volume per day |
2.0 M |
1.8 M |
Total international export volume grew 11.3%. Non-U.S. domestic package
volume posted solid 4% growth as the company overlapped the effect of an
acquisition.
During the quarter, UPS announced the expansion of its international shipping
portfolio by providing three time-definite delivery options each day to the
world's 30 largest markets, up from one or two daily options. These new delivery
services make UPS's international delivery portfolio the most expansive in the
industry and cover more than 80% of the world's GDP.
| Supply Chain and Freight |
4Q 2006 |
4Q 2005 |
| Revenue |
$2.06 B |
$1.91 B |
| Operating profit (loss) |
$(1) M |
$43 M |
| Operating margin |
-- |
2.3% |
The Supply Chain and Freight segment improved from the third quarter,
reflecting the positive impact of cost control measures taken in the fourth
quarter. UPS Freight's performance was impacted by the general softening in the
Less-Than-Truckload (LTL) environment.
Outlook
"We anticipate another good year in our global
small package business despite a slowing U.S. economy," said Scott Davis, UPS's
vice chairman and chief financial officer. "We also expect our Supply Chain and
Freight segment to gain momentum as the year progresses."
Davis said he anticipates diluted earnings per share for the full year 2007
to increase 6-to-10%, or within a range of $4.10 to $4.25, compared to the $3.86
reported in 2006. For the first quarter of 2007, UPS is projecting diluted
earnings per share in the range of $0.94 to $0.98 compared to the $0.89 reported
in the prior-year period.
"We're encouraged by the opportunities we see for our company around the
globe," Davis added. "We're operating a healthy business in a vital industry,
and we believe our long-term strategy of providing supply chain solutions to our
customers is right on target."
UPS, which celebrates its 100th anniversary in 2007, is the world's largest
package delivery company and a global leader in supply chain services, offering
an extensive range of options for synchronizing the movement of goods,
information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200
countries and territories worldwide. UPS's stock trades on the New York Stock
Exchange (UPS) and the company can be found on the Web at www.ups.com. To get UPS news direct, visit pressroom.ups.com/RSS.
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