UPS (NYSE: UPS) today announced diluted earnings per share of $0.75 for
the fourth quarter of 2009, above the company's original guidance of $0.58 to
0.65 per share, due in large measure to strong performance by its international
segment. That segment saw volume growth, a substantial gain in operating profit
and improvement to a 16.7% operating margin.
The quarter's diluted earnings per share declined 9.6% compared to the $0.83
in adjusted diluted earnings per share a year ago. Reported earnings per
share for 2008 were $0.25.
For 2009, UPS generated free cash flow of $4.1 billion and posted adjusted
operating profit of $4.0 billion. On a reported basis, operating profit was $3.8
billion. Adjusted earnings per share were $2.31 and $2.14 on a reported
basis.
"UPS ended 2009 on a high note by leveraging network changes implemented
throughout the year and executing flawlessly during the peak holiday shipping
period, which was stronger than we had anticipated," said UPS Chairman and CEO
Scott Davis. "The company demonstrated its ability to manage effectively in
changing market conditions. UPS has emerged from the worst recession in
decades leaner, more focused and better positioned to take advantage of
increased global trade."
| |
|
|
4Q 2008 |
| Consolidated Results |
4Q 2009 |
4Q 2008 |
Adjusted |
| Revenue |
$12.38 B |
$12.70 B |
|
| Operating profit |
$1.26 B |
$803 M |
$1.38 B |
| Operating margin |
10.2% |
6.3% |
10.9% |
| Average volume per day |
17.3 M |
17.3 M |
|
| Diluted earnings per share |
$0.75 |
$0.25 |
$0.83 |
For the three months ended Dec. 31, 2009, package volume rose 1.4% to 1.1
billion pieces while average volume per day was unchanged at 17.3 million
packages.
During the holiday shipping season, global volume exceeded 22 million
packages on eight days, including two on which it exceeded 24 million packages.
UPS experienced more delivery volume than in 2008 on each of the seven days
before Christmas. A well-executed peak season operating plan and
significant growth in online retail sales contributed to the
stronger-than-expected results for the quarter.
For the full year, the company delivered 3.8 billion packages, an average of
15.1 million per day, down from 15.5 million in 2008. Revenue decreased 12%
to $45.3 billion.
Cash PositionUPS ended 2009 in a strong financial
position. In addition to exceptional free cash flow, UPS also:
- Paid $1.8 billion in dividends.
- Invested $1.6 billion in capital expenditures.
- Repurchased a total of 10.9 million shares for $569 million.
- Ended the year with $2.1 billion in cash and short-term investments.
| U.S. Domestic Package |
4Q 2009 |
4Q 2008 |
| Revenue |
$7.55 B |
$7.99 B |
| Operating profit |
$764 M |
$932 M |
| Operating margin |
10.1% |
11.7% |
| Average volume per day |
14.9 M |
15.1 M |
For the fourth quarter, air volume increased with Next Day Air up 2.8% and
deferred up 4.3%. However, ground volume per day was down 2.9%. Total U.S.
average daily volume decreased 1.9%. Operating margin improved sequentially to
10.1%, the highest in 2009. The 5.2% decline in revenue per piece was driven
primarily by lower fuel surcharges and weight declines.
In the quarter, UPS took the lead in the mobile shipping arena with the
introduction of applications for iPhone, iPod and BlackBerry devices. In
addition, the company expanded its WorldShip platform with integration of a
freight forwarding capability that complements its small package and LTL freight
shipping processes.
On Jan. 8, 2010, UPS announced it was restructuring the U.S. Domestic Package
segment. By leveraging technology and the management skills of its people,
the company will create larger geographic operating entities and provide more
marketing resources at the local level. The new structure will be in place
by early April.
| |
|
|
4Q 2008 |
| International Package |
4Q 2009 |
4Q 2008 |
Adjusted |
| Revenue |
$2.79 B |
$2.64 B |
|
| Operating profit |
$467 M |
$366 M |
$393 M |
| Operating margin |
16.7% |
13.9% |
14.9% |
| Average volume per day |
2.4 M |
2.2 M |
|
International operating profit jumped 18.8% on an adjusted basis and 27.6% on
a reported basis on revenue growth of 5.8%.
Average daily volume growth of 11.8% was driven by increases of 3.1% in
export and 17.8% in domestic. These gains and strong cost management
contributed to an operating margin of 16.7%, the highest since the fourth
quarter of 2007. All regions experienced export volume growth, led by Asia
and the United States. Domestic volume improvement was driven by a
third-quarter acquisition in Turkey along with strong performance in Europe and
Canada.
During the quarter, UPS continued investing for the future with the opening
of its expanded hub in Toronto, Ontario, which more than doubled its package
handling capability.
| |
|
|
4Q 2008 |
| Supply Chain and Freight |
4Q 2009 |
4Q 2008 |
Adjusted |
| Revenue |
$2.03 B |
$2.07 B |
|
| Operating profit |
$28 M |
($495 M) |
$53 M |
| Operating margin |
1.4 % |
(23.9%) |
2.6% |
Reductions in segment revenue and operating profit were caused by declines in
global forwarding and UPS Freight.
Forwarding's operating margin was challenged by rapidly escalating
transportation costs stemming from a surge in demand in a capacity-constrained
environment out of Asia.
The Logistics business recorded an increase in revenue, driven by growth in
the healthcare sector. Improved operating efficiencies and contract
management produced strong results.
UPS Freight experienced a difficult fourth quarter. Revenue per
hundredweight increased, but shipments were flat and tonnage declined. The
unit posted an operating loss for the quarter due to the extremely competitive
pricing environment in the LTL business. Year-over-year, UPS Freight gained
market share.
Outlook"Economic forecasts indicate gradual improvement
as 2010 unfolds," said Kurt Kuehn, UPS's chief financial officer. "The
first quarter will be the most challenging of the year for UPS with
profitability only slightly better than last year.
"For 2010, UPS will substantially improve performance by leveraging our
extensive product portfolio and global network," Kuehn continued. "As a
result, we anticipate that diluted earnings per share should be within a range
of $2.70 to $3.05, an increase of 17% to 32% over 2009 results. We also expect
cash generation to remain strong in 2010, with capital expenditures totaling
$1.8 billion. This is well below our historical range but still supports
growth opportunities."
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