UPS 3Q EARNINGS CLIMB 69% ON REVENUE GROWTH OF 9%
Strong Growth Across all Segments; UPS Raises Annual Guidance
ATLANTA, Oct. 21, 2010 – UPS (NYSE:UPS) today announced adjusted diluted earnings per share of $0.93 for the third quarter of 2010, a 69% improvement over the prior-year period. Global revenue grew 9.3%, generating $1.5 billion in adjusted operating profit, a 62% increase.
On a reported basis, diluted earnings per share were $0.99, an 80% increase over the $0.55 in the same period last year. During the quarter, UPS recorded an after-tax benefit of $61 million on the sale of real estate.
“UPS once again exceeded expectations due to superior execution across all business units and our ability to provide solutions that create value for our customers,” said Scott Davis, UPS chairman and CEO. “We continue to deliver significant earnings growth and margin expansion in the current economic environment. This is a true testament to what can be accomplished when you have excellent people, superior service and an unmatched global portfolio.”
Based on the company’s performance, UPS has increased its guidance for 2010 adjusted diluted earnings to a range of $3.48 to $3.54 per share, a 51%-to-53% increase over last year.
Adjusted
Consolidated Results 3Q 2010 3Q 2010 3Q 2009
Revenue $12.19 B $11.15 B
Operating profit $1.62 B $1.51 B $929 M
Operating margin 13.3 % 12.4 % 8.3 %
Average volume per day 15.0 M 14.3 M
Diluted earnings per share $0.99 $0.93 $0.55
For the three months ended Sept. 30, 2010, revenue increased 9.3% on average daily volume growth of 5%. UPS delivered 958 million packages in the quarter.
Adjusted operating margin expanded 410 basis points to 12.4%. On a reported basis, operating margin was 13.3%.
During the quarter, UPS unveiled a new communications platform with the theme “We Love Logistics.” This campaign is UPS’s first coordinated global advertising effort and is designed to demonstrate the power of logistics to businesses around the world.
Cash Position
For the nine months ending Sept. 30, UPS generated $3.5 billion in free cash flow. The company also:
- Paid dividends totaling $1.36 billion.
- Invested $1 billion in capital expenditures.
- Repurchased 9.3 million shares at a cost of $589 million.
Adjusted
U.S. Domestic Package 3Q 2010 3Q 2010 3Q 2009
Revenue $7.29 B $6.87 B
Operating profit $1.02 B 911 M $514 M
Operating margin 14.0 % 12.5 % 7.5 %
Average volume per day 12.73 M 12.29 M
Adjusted operating profit increased 77% to $911 million on revenue growth of 6%. The margin expansion of 500 basis points was driven by volume growth, improved yields and the benefits of more streamlined operations. Reported operating profit was $1.02 billion, a 98% increase.
Average daily package volume expanded 3.6% during the quarter due to growth in Ground and Next Day Air®. Revenue per piece improved 4%, primarily through increases in base pricing and higher fuel surcharges.
During the quarter, UPS introduced Returns® Flexible Access, expanding the options for consumers in the U.S. to return goods to retailers. The combination of UPS and postal access channels creates the most extensive returns network available to consumers today.
International Package 3Q 2010 3Q 2009
Revenue $2.68 B $2.42 B
Operating profit $419 M $313 M
Operating margin 15.7 % 12.9 %
Average volume per day 2.24 M 1.97 M
The operating profit for the segment increased 34% to $419 million on an 11% increase in revenue. Operating margin improved 280 basis points to 15.7%. Export average daily volume increased 13%, outpacing the market, due to growth in all regions with Asia leading the way, up more than 30%.
Non-U.S. domestic volume increased 14% with strength across Europe, Canada and Mexico.
As part of an on-going strategy to grow its business in emerging markets, UPS entered into an expanded alliance with its local domestic courier in Indonesia. This agreement extends the footprint for pick-up and delivery of international express packages throughout the country.
Supply Chain and Freight 3Q 2010 3Q 2009
Revenue $2.23 B $1.86 B
Operating profit $177 M $102 M
Operating margin 8.0 % 5.5 %
Revenue grew 19% with the Forwarding business unit leading the way. Operating profit jumped 74% to $177 million, powered by Forwarding and Logistics.
The operating margin for the segment increased 250 basis points to 8.0%. This margin expansion was primarily driven by improved revenue management, increased tonnage and improved operational efficiencies in Forwarding and Logistics.
UPS Freight revenue grew 14% due to improved yield and increases in gross weight hauled.
During the quarter, UPS launched Preferred LCL Ocean Freight, a new service that provides up to 20% faster door-to-door delivery than other less-than-container-load (LCL) services on the market.
Outlook
“UPS generated superior performance across all segments,” said Kurt Kuehn, UPS’s chief financial officer. “This is a direct result of the successful execution of our long-range strategy.
“I am confident in UPS’s ability to generate strong cash flow and continued earnings growth while investing in growth opportunities around the world,” Kuehn added. “Based on the projections of retailers and economists, we expect modest growth during the holiday peak season. We are raising our full-year 2010 guidance with adjusted earnings per share expected to grow more than 50% over last year.”
Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic directions, prospects and future results, involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, governmental regulations, our competitive environment, strikes, work stoppages and slowdowns, changes in aviation and motor fuel prices, cyclical and seasonal fluctuations in our operating results, and other risks discussed in the company's Form 10-K and other filings with the US Securities and Exchange Commission, which discussions are incorporated herein by reference.
Norman Black, Public Relations
+1-404-828-7593
Andy Dolny, Investor Relations
+1-404-828-8901
Lotta Söderström, Communications Supervisior
UPS Nordics
+46 70 309 74 10
lsoderstrom@ups.com
UPS (NYSE:UPS) is a global leader in logistics, offering a broad range of solutions including the transportation of packages and freight; the facilitation of international trade, and the deployment of advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, USA, UPS serves more than 220 countries and territories worldwide. The company can be found on the Web at www.ups.com and its corporate blog can be found at www.blog.ups.com. To get UPS news direct, visit www.pressroom.ups.com.