India reports a more than 15 % growth in export volumes
INDIA, April 28, 2008 - UPS (NYSE:UPS) today reported
increased revenue in all segments with double-digit gains in both international
package and supply chain and freight operations. A sharp decline in U.S.
economic activity, however, led to a 9.4% drop in diluted earnings per share to
$0.87 compared to a prior-year adjusted $0.96.
UPS India reported a more than 15% increase in export volumes for the
year-to-date.
"UPS in Asia is performing well with double digit growth in the first
quarter. We successfully launched a new portfolio of enhanced services
such as UPS Paperlesssm Invoice and International Returns® which have
been well received in the marketplace, and raised the bar for premium delivery
services in the industry," said Derek Woodward, President, UPS Asia Pacific. "We
believe that in an environment of economic uncertainty, it is even more critical
today for companies to operate efficiently and better manage their supply chain
for greater competitive advantage. Our global network, technology and expertise
position us well to serve this need."
Scott Davis, UPS chairman and CEO said, "in light of the difficult U.S.
economic environment we will be extremely vigilant with respect to costs and
will not lose our focus on growing the business. We will continue to invest in
the infrastructure, new products and services that will enable our customers to
succeed in the global marketplace. UPS has successfully managed its operations
through many economic cycles and we will do so again."
"India is a priority market for us. We see the contribution of the SME's
increasing this year across various sectors. Also, the introduction of our new
suite of services last quarter, in particular, UPS Paperless Invoice and UPS
Returns will play an important role in ensuring that our customers benefit from
critical time saving processes, resulting in higher growth prospects," said
Pirojshaw Sarkari, Managing Director, UPS Jetair Express Pvt. Ltd.
In 2007, first quarter adjusted earnings per share excluded an impairment
charge related to aging jet aircraft and expenses for a voluntary separation
program. Including these charges, diluted earnings per share for the first
quarter of 2008 increased 11.5% over the $0.78 per share reported in the prior
year.
For the three months ended March 31, 2008, consolidated revenue increased
6.5% to $12.7 billion while consolidated average daily volume remained flat at
15.1 million packages per day. Consolidated average revenue per piece increased
5.4%.
Consolidated
Results
1Q 2008 1Q 2007 1Q 2007 adjusted
Revenue
$12.7B $11.9B
$1.65B
Operating
profit
$1.49B $1.36B
0.138
Operating
margin
0.118 0.114
Average volume per
day
15.13M 15.13M
$0.96
Diluted earnings per
share
0.87 $0.78
During the first quarter, UPS delivered total consolidated volume of 968
million packages, unchanged from a year ago. Results were negatively
affected by a shift from premium products, the timing of the Easter holiday and
sharply rising fuel costs.
Cash Position
UPS ended the quarter with $1.48 billion in
cash and marketable securities. UPS also:
- Generated $1.62 billion in free cash flow, excluding an $850 million U.S.
federal tax refund related to the company's withdrawal from the Central States
Pension Plan.
- Purchased 17.4 million shares at a cost of $1.24 billion, leaving $8.9
billion of the authorization remaining for purchases UPS expects to complete by
the end of 2009.
- Paid dividends totaling $893 million. The dividend was increased 7% during
the quarter.
- Invested $661 million in capital expenditures.
U.S. Domestic
Package 1Q
2008 1Q 2007 1Q 2007
adjusted
Revenue
$7.74 B $7.55 B
Operating
profit
$959 M $941 M
$1.15B
Operating
margin
0.124
0.125 0.153
Average volume per
day 13.25
M 13.29 M
The slowing U.S. economy not only reduced average daily volume in the U.S. by
0.3% for the quarter but also contributed to a shift away from premium products.
Volume declined 3.8% for Next Day Air® and 2.9% for Deferred, while
increasing 0.3% for Ground. Revenue per piece remained stable for all service
levels, with consolidated revenue per piece increasing 2.7%.
The volume decrease, shift away from premium products and increased fuel
costs during the quarter contributed to the declines in operating profit and
margin.
International
Package 1Q
2008 1Q 2007 1Q 2007
adjusted
Revenue
$7.74B $7.55
Operating
profit
$959M $941
$1.15B
Operating
margin
0.124 0.125
0.153
Average volume per
day
$13.25M 13.29M
The segment's performance, as expected, was negatively impacted by the timing
of Easter, which resulted in two fewer operating days in Europe. The segment
also experienced higher fuel costs in the quarter. Export volume increased
approximately 10% in local operating days, which drove a 15.7% revenue increase.
U.S. export volume growth was strong, leading to a balanced global performance
with Asia, Europe and the U.S. each experiencing a double-digit increase.
Supply Chain and
Freight 1Q
2008 1Q 2007 1Q 2007
adjusted
Revenue
$2.18B 1.976
Operating
profit
$113M
$46M $54M
Operating
margin
0.052
0.023 0.027
Revenue increased almost 11%. Forwarding and Logistics revenue increased
12.8%, driven by the new airfreight portfolio launched in January. LTL freight
revenue grew 4.1% and was constrained by the slowing U.S. economy. Operating
profit for the segment more than doubled.
Outlook
"We see no signs of economic strengthening in the
second quarter," said Kurt Kuehn, UPS's chief financial officer. "As a result,
the company expects earnings for the quarter in a range of $0.97 to $1.04 per
diluted share compared to $1.04 for the second quarter of 2007."
Commenting on annual earnings guidance, Kuehn said, "Most forecasters are
projecting that current anemic conditions will prevail for the remainder of the
year. Therefore, we are reducing our 2008 earnings expectations to a range of
$3.90 to $4.20 per diluted share.
"Despite the current state of the U.S. economy, the long-term growth
fundamentals for our industry and for UPS are very favorable," Kuehn, added.
"Our international and supply chain businesses continue to offer great
opportunity. In the U.S., we're positioning our small package business to
weather this downturn and to be poised for economic recovery."
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