Atlanta-based global freight transportation and logistics services provider UPS reported solid fourth quarter and full-year 20198 earnings results today.
Quarterly revenue, at $20.5 billion, headed up 3.6% annually, and adjusted earnings per share, at $2.11, was up 8.8% matched Wall Street estimates in the $2.10-$2.11 range. Full-year 2018 revenue rose 3.1% annually to $74.1 billion, which UPS said was paced by strong volume growth in its U.S. domestic segment and the impact of successful execution from all segments.
Individual segment results for Q4:
U.S. domestic package revenue increased 6.6% to $13.4 billion, with operating profit at $1.074 billion up 7.5%. Average daily shipments were up 8.8% to 23.1 million, with Next Day Air up 25.9% at 2.252 million, Deferred up 15.6% to 2.268 billion, and Ground up 6.3% at 18.6 billion. Revenue per package was down 2% at $9.36, with Next Day Air off 12.6% to $16.61, Deferred down 5.1% at $11.99, and Ground down 1% at $8.16;
-International Package revenue on an adjusted basis was down 1.7% at $3.729 billion. Domestic international package average revenue per piece was off 1.4% at $6.49, with export average piece per package revenue down 0.9% at $28.56; and
-Supply Chain and Freight revenue was down 1.3% annually at $3.398 billion. LTL revenue was up 9.4% to $639 million, and LTL revenue per hundredweight was up 2.5% at $27.01. Total quarterly shipments were up 10.3% at 2.217 million, and shipments per day at 35,800 thousand were up 10.3%
On the company’s earnings call this morning, UPS Chairman and CEO David Abney explained that during the fourth quarter UPS continued to successfully execute its strategies and deliver on its commitments.
“Revenue growth, improved network efficiency to drive operating leverage, and continued transformation to stay ahead of market changes, and our multi-year investment strategies are positioning us well to support the needs of our customers, generate profitable revenue growth, reward our shareholders, and create opportunities for our employees,” he said.
Addressing the fourth quarter, which includes Peak Season, Abney said that UPS delivered more than 1.6 billion packages, including a record level of residential packages, which he said exceeded the company’s expectations. What’s more, the said UPS was recognized by third parties for providing industry-leading, on-time service for what he called remarkably high peak volume.
“Our execution over the holidays benefitted from increased capacity and automation throughout the network, the use of proven tools and enhanced technology and deeper collaboration with our customers to align volume with network capacity,” he said. “Our operating teams took advantage of 20 new aircraft, an additional 10 million square-feet of automated capacity that we added to our network in 2018 and 2019, which enabled us to provide great service to our customers for the last two Peak Seasons. Many of the technologies and processes we employed in Peak Season will carry forward and make our normal daily operations more efficient year-round.”
Looking at the 2020 economic backdrop, Abney said it will provide opportunities for UPS, with consumer demand healthy both globally and in the U.S., with UPS positioning solutions to grow commercial deliveries despite weakness in the industrial sector.
And he noted that global GDP estimates are calling for slower growth in the first half of the year, with full-year growth at 2.5% that would end up in the same range as 2019, which he said is below what many consider a normal growth rate.
On a more positive note, he pointed out that the recent signings of the USMCA and the Phase One U.S.-China agreement are historic events, with each serving as a big step in the right direction for global trade.
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