Bangkok--10 Feb--Ogilvy Public Relations Worldwide
Asia Leads International Volume Growth with Nearly 30% Surge in 2010
UPS (NYSE:UPS) today announced adjusted diluted earnings per share of $1.08 for the fourth quarter of 2010, a 44% improvement over the prior-year period. Global revenue grew 8.4%, generating $1.8 billion in adjusted operating profit, a 40% increase.
On a reported basis, diluted earnings per share totaled $1.11, a 48% increase over the $0.75 reported for the same period last year. During the quarter, UPS recorded a net after-tax gain of $32 million related to the sale of certain non-core business units.
For the full year 2010, the company delivered 3.9 billion packages, an average of 15.6 million per day. Revenue increased 9.4% to $49.5 billion. Adjusted operating profit soared 47% to $5.8 billion with the International and Supply Chain & Freight segments achieving record-setting levels, generating $1.9 billion and $577 million, respectively. On a reported basis, operating profit for the year was $5.9 billion, up 55%. Adjusted diluted earnings per share were $3.56, up 54%, and $3.48 on a reported basis, up 63%.
Based on expectations for 2011, UPS is providing annual guidance for diluted earnings per share to a range of $4.12-to-$4.35, an increase of 16-to-22% over 2010 adjusted results. This would exceed the peak earnings level recorded in 2007.
Fourth Quarter and Annual Growth for Asia
In Asia Pacific, fourth quarter growth was led by Vietnam and China with more than 50% and more than 30% growth respectively. For the entire year, Vietnam also experienced more than 50% growth, while China grew by more than 40%. Key to China’s growth was the opening of the UPS Shenzhen Asia Pacific hub which connects key Asian markets with China.
“UPS again demonstrated exceptional earnings growth by leveraging the strength of our network to provide solutions for customers. UPS’s export volumes in Asia grew by more than 15% in the last quarter which was significant considering the strong growth achieved in the same quarter last year. For the full year of 2010, we’ve seen nearly 30% growth in the region” said Derek Woodward, president, UPS Asia Pacific Region. “Asia continues to be critical for UPS’s growth and in 2010, the strategy was to increase our opportunities and capacity from the region.”
Asia Strategy
The Asia strategy has been focused on forming strategic alliances in key markets. Agreements with local UPS service partners in Vietnam, Malaysia and Indonesia simplified logistics processes in those markets, leading to customized solutions for clients which facilitated their business operations.
In the last quarter, UPS in Asia Pacific also saw more than 25% growth in exports to the South American region where key emerging markets like Brazil and Mexico are located.
“I’m encouraged by the opportunities we see in 2011 as UPS continues to expand into emerging markets. We will also be investing heavily within industries such as healthcare with the opening of state-of-the-art facilities in Singapore and elsewhere in the Asia Pacific Region. These investments are designed to provide a complete supply chain solution for our healthcare clients and they are a demonstration of our commitment to this particular business segment,” Woodward continued.
Adjusted
Consolidated Results 4Q 2010 4Q 2010 4Q 2009
Revenue $13.42 B $12.38 B
Operating profit $1.81 B $1.76 B $1.26 B
Operating margin 13.5 % 13.1 % 10.2 %
Average volume per day 17.7 M 17.3 M
Diluted earnings per share $1.11 $1.08 $0.75
For the three months ended Dec. 31, 2010, UPS delivered 1.1 billion packages, a 3.9% increase. Adjusted operating margin expanded 290 basis points to 13.1%. On a reported basis, operating margin was 13.5%.
During the holiday shipping season, global volume exceeded 24 million packages on five days, including one day that exceeded 25 million. UPS delivered more than 440 million packages during the holiday shipping season, powered by strong demand from on-line retailers.
Cash Position
For the year ending Dec. 31, UPS generated $3.1 billion in free cash flow even after $2 billion in accelerated contributions to defined benefit pension plans in the fourth quarter. The company also:
? Invested $1.4 billion in capital expenditures.
? Paid dividends totaling $1.8 billion.
? Repurchased 12.4 million shares at a cost of approximately $800 million.
U.S. Domestic Package 4Q 2010 4Q 2009
Revenue $8.08 B $7.55 B Operating profit $1.04 B $764 M
Operating margin 12.9 % 10.1 %
Average volume per day 15.12 M 14.86 M
Operating profit increased 37% to $1.04 billion on revenue growth of 7%. The margin expansion of 280 basis points was driven by higher yields, operational efficiencies and volume growth.
Revenue per piece improved 3.5%, primarily through increases in base pricing and higher fuel surcharges. Average daily package volume was up 1.7% during the quarter due to growth in UPS Next Day Air and Ground.
The company noted a strong response by U.S. customers to its new UPS Smart Pickupsm service, designed for those who want the convenience of a scheduled pickup but may not ship a package every day. This high-tech service, the latest in a series of environmentally responsible offerings, alerts UPS drivers when a pickup needs to be made.
International Package 4Q 2010 4Q 2009
Revenue $3.05 B $2.79 B Operating profit $537 M $467 M
Operating margin 17.6 % 16.7 %
Average volume per day 2.54 M 2.42 M
The operating profit for the segment increased 15% to $537 million on 9% growth in revenue. The operating margin expanded to 17.6% as a result of volume growth, yield improvement and excellent cost management.
Export average daily volume increased 8.7%. The company experienced strong growth from key export countries, with China up more than 30%. European exports continued to show solid performance, led by double-digit gains in Germany.
For 2010, International volume increased 13.6% to a record 2.3 million packages per day. Throughout the year, UPS significantly increased its global network capacity to take advantage of opportunities in the marketplace. For example, airlift out of Asia to the United States and Europe was increased by 40%.
During the quarter, UPS deployed technology aimed at the rapidly growing mobile user market. The popular UPS Mobile Apps and mobile Web site were released to customers in Germany, Canada, the United Kingdom, Italy and France.
Adjusted
Supply Chain & Freight 4Q 2010 4Q 2010 4Q 2009
Revenue $2.29 B $2.03 B Operating profit $234 M $176 M $28 M
Operating margin 10.2 % 7.7 % 1.4 %
Adjusted operating profit improved more than six fold to $176 million on revenue growth of 13%. The adjusted operating margin for the segment increased 630 basis points to 7.7%, with all business units contributing.
UPS Freight outpaced the market with revenue up 23% due to double-digit growth in shipments per day, an increase in gross weight hauled and significant yield improvement. Forwarding and Logistics revenue increased 10.1% to $1.6 billion, driven primarily by revenue management initiatives in the Forwarding business unit.
As the year ended, UPS announced a significant expansion of its global healthcare distribution facility network in the U.S., Asia, Europe and Canada to accommodate continued rapid growth in its healthcare business. These new facilities are specially designed to meet the needs of pharmaceutical, biotech and medical device companies.
Outlook
“The fourth quarter results punctuate a year in which UPSers superbly executed our strategy,” said Kurt Kuehn, UPS’s chief financial officer. “As we close the book on 2010 and look towards 2011, UPS is uniquely positioned for growth in the future.
"Over the past two years, UPS took the necessary steps to weather the economic storm and emerged stronger," Kuehn continued. "As a result, we expect to exceed previous peak earnings level with 2011 diluted earnings per share within a range of $4.12 to $4.35, an increase of 16% to 22% over adjusted 2010 results.”
“Cash flow will continue to be strong, creating a foundation for increasing returns to shareholders,” Kuehn added. “We plan to significantly ramp up share repurchases, to approximately $2 billion in 2011.”
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, UPS serves more than 220 countries and territories worldwide. The company can be found on the Web at UPS.com and its corporate blog can be found at blog.ups.com. To get UPS news direct, visit pressroom.ups.com/RSS.
Issued on behalf of: UPS Thailand
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