Asia Pacific delivers nearly 20% growth for the year with strong contributions from China and India
Taiwan, Feb. 19, 2008 - UPS (NYSE: UPS) today reported adjusted diluted earnings per share of $1.13 for its fourth quarter, an 8.7% increase over last year. Revenue improved 6.1% driven by a double-digit increase in international export volume, growth and firm pricing in the U.S. package business and market-leading shipment gains at UPS Freight.
In Asia Pacific, UPS reported more than 15% growth for the quarter compared to the same period last year driven by strong growth of more than 30% in China and nearly 25% in India. For full year 2007, the Asia region delivered growth of nearly 20%.
Gary Wu, General Manager of UPS Taiwan said," Leveraging on the intra-Asia network is very important to our next momentum of growth; the emerging China and India markets have brought benefits to Taiwan in 2007 and we hope this trend will continue to lead UPS Taiwan into even more robust growth this year. 2008 is slated to be an exciting year for us as we step up our activities in preparation for the opening of the UPS International Air Hub in Shanghai at the end of the year.
In December 2007, UPS announced an alliance with AFL in India to enhance international export service there, increasing the number of access points for Indian customers in the country to over 200. Almost two months before that, UPS and Staples established two new co-branded stores, Staples UPS Express in Beijing. The stores offer customers a convenient, one-stop location for office supplies, document services and international shipping needs.
During the quarter, UPS headquarters announced the ratification of a new five-year agreement with the International Brotherhood of Teamsters, eight months before expiration of the existing contract. As a result, $6.1 billion was paid to withdraw approximately 45,000 UPS employees from the Central States multi-employer pension plan and expensed to the U.S. Package segment in the quarter. Including the impact of that charge, diluted earnings per share fell to a loss of $2.46 for the three-month period.
"In 2007, UPS delivered on its forecast in an economic environment that became increasingly challenging over the year," said UPS Chairman and CEO Scott Davis. "We achieved this through sound execution in all parts of our business. In addition, we reached an historic labor contract with the Teamsters. I would like to thank UPSers around the world for their efforts."
|
|
4Q 2007 |
|
| Consolidated Results |
4Q 2007 |
Adjusted |
4Q 2006 |
| Revenue |
$13.4 B |
|
$12.6 B |
| Operating profit (loss) |
($4.25 B) |
$1.85 B |
$1.81 B |
| Operating margin |
(31.8%) |
13.8% |
14.3% |
| Average volume per day |
17.7 M |
|
17.3 M |
| Diluted earnings (loss) per share |
($2.46) |
$1.13 |
$1.04 |
The fourth quarter produced solid growth in spite of a sluggish U.S. economy. Consolidated average daily package volume reached a record level of 17.7 million pieces, an increase of 359,000 per day. Adjusted net income for the quarter benefited from a lower effective tax rate.
For the full year, the company delivered a record 3.97 billion packages, an average of 15.8 million per day. Consolidated revenue climbed 4.5% to $49.7 billion. Adjusted diluted earnings per share were $4.17, an increase of 8% compared to 2006 and at the midpoint of UPS's earnings guidance for 2007. Before adjustments, operating profit equaled $578 million and diluted earnings per share totaled $0.42.
Cash Position
UPS ended 2007 in a strong financial position. Even after the withdrawal payment to the Central States Pension Plan, for the year the company:
- Generated cash from operations of $1.1 billion
- Purchased 35.9 million shares for $2.6 billion
- Paid $1.7 billion in dividends
- Invested $2.8 billion in capital expenditures
On Jan. 9, 2008, the company announced it had adopted a new financial policy aimed at enhancing shareowner value. UPS intends to manage its balance sheet to a target ratio within a range of 50-to-60% funds from operations to total debt. The change "will enable us to make increased investments in the business, pursue growth opportunities and undertake larger share repurchases," said Kurt Kuehn, UPS's chief financial officer.
| |
|
4Q 2007 |
|
| U.S. Package |
4Q 2007 |
Adjusted |
4Q 2006 |
| Revenue |
$8.31 B |
|
$8.13 B |
| Operating profit (loss) |
($4.89 B) |
$1.21 B |
$1.30 B |
| Operating margin |
(58.9%) |
14.5% |
15.9% |
| Average volume per day |
15.6 M |
|
15.4 M |
Total U.S. daily volume increased 1.4%, with ground up 1.5% and Next Day Air® gaining 2.2%. Pricing remained firm, improving 2.3%. Adjusted operating profit declined as fuel prices increased rapidly during the quarter.
During the peak holiday shipping season, deliveries exceeded 20 million packages on five consecutive days and 22 million packages on two days.
| International Package |
4Q 2007 |
4Q 2006 |
| Revenue |
$2.87 B |
$2.44 B |
| Operating profit |
$557 M |
$514 M |
| Operating margin |
19.4% |
21.0% |
| Average volume per day |
2.1 M |
2.0 M |
Revenue increased 17.3% on daily export volume growth of 12.2%. Pricing remained firm as operating profit increased to a record high of $557 million.
In January, the company also introduced the new services for international shippers: international returns. UPS is the first package carrier who possesses package return capability to 98 countries and territories. The strategy and service make it easier for customers to expand their businesses to new markets around the globe.
| Supply Chain and Freight |
4Q 2007 |
4Q 2006 |
| Revenue |
$2.22 B |
$2.06 B |
| Operating profit |
$82 M |
($1 M) |
| Operating margin |
3.7% |
-- |
Fourth quarter revenue for the segment improved 7.8% and operating profit increased $83 million over last year's results. In a challenging heavy freight environment, UPS Freight boosted revenue by 12.2% to $525 million with less-than-truckload (LTL) shipments per day increasing 7.8%, well outpacing the market. In the Forwarding and Logistics unit, revenue increased 6.4% to $1.57 billion.
In January, UPS Freight announced it was guaranteeing its on-time performance at no additional cost to customers using the LTL freight tariff in the continental United States. UPS also launched a simplified air freight services portfolio, including a substantially expanded express freight option with guaranteed door-to-door service. The new air freight portfolio is better aligned to meet market and customer needs, easier to access and use and streamlined for more effective selling by the sales force.
Outlook
"While there is more uncertainty in the U.S. economy today than there was a year ago, we remain focused and confident that we will grow our global business," said Kuehn. "No competitor can match the combination of our service portfolio, technology and integrated global network. Customers are responding well to these offerings.
"We anticipate the first quarter will be the most difficult of the year due to lower profitability from an early Easter and additional interest expense not yet offset by labor contract benefits," the CFO continued. "Therefore, earnings per share for the quarter should be within the range of $0.94-to-$0.98. For the full year, we expect earnings per share to be between $4.30 and $4.50."
UPS (NYSE: UPS) is the world's largest package delivery company and a global leader in supply chain and freight services. With more than a century of experience in transportation and logistics, UPS is a leading global trade expert equipped with a broad portfolio of solutions. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. The company can be found on the Web at UPS.com.
|
|
 |
UPS Pressroom |
|
|
Read press releases, announcements and other media-related information about UPS.
|
|
 |
|
View History