Bangkok--Feb 16--Ogilvy Public Relations Worldwide
Full-Year Earnings Up 15% As International Profits Exceed $1 Billion;
Asia Export Volume Up 34% With 125% Export Volume Growth In China
UPS reported a solid revenue gain of 10.2% in its fourth quarter and earnings of $0.76 per diluted share, up 1.3% compared to the prior-year period. For the full year, revenue increased to a record $36.6 billion while net income climbed 15%.
Consolidated revenue for the three months ended Dec. 31, 2004, rose to $9.84 billion, with strong double-digit growth reported by the international and non-package segments and a 6.6% increase by the U.S. domestic segment.
Consolidated worldwide package volume for the fourth quarter rose 3.7% to 963 million, while consolidated average daily volume increased by 297,000 packages per day to 15.5 million. Growth was led by international export volume, up 13.5%, and U.S. Next Day Air?, which increased 4.1%. Ground volume within the U.S. grew at 1.5%.
“Our global small package business remains strong and 2004 was an excellent year,” said Scott Davis, UPS’s chief financial officer. “UPS delivered almost 3.6 billion packages in 2004 — the most in our history — although we were disappointed with our U.S. ground volume growth in the fourth quarter. As a result, we will focus several new efforts in this area in the coming months.”
Adjusted diluted earnings per share were $0.82 for the fourth quarter of 2004, up 17% over the adjusted $0.70 for the prior-year period.
Highlights by segment for the fourth quarter included:
- International package revenue increased almost 23% to $1.9 billion on a 13.5% gain in average daily export volume. Overall, international average daily package volume rose 5.6%. Asia export volume increased 34% with export volume out of China up 125%. Excluding the aircraft impairment charge, operating profit for the segment jumped 40% to $337 million, completing a year in which the segment generated more than $1 billion in operating profit for the first time ever. Adjusted operating margin increased 220 basis points to 18.1%.
- U.S. domestic package revenue grew 6.6% during the period to $7.1 billion. Excluding the impact of the aircraft and pension charges, described above, operating profit rose 1% to $919 million and the operating margin was 13%. Average daily ground volume in the U.S. grew 1.5% for the quarter. Total Next Day Air? volume grew strongly at 4.1%. Yields remained strong, with an increase in revenue per piece of 3.2% for all U.S. domestic products.
- Revenue for the non-package segment increased 16.6% to $880 million, including an 11.6% revenue gain for the UPS Supply Chain Solutions unit. Revenue growth for the segment was on track and hit its target for the year. UPS completed its acquisition of Menlo Worldwide Forwarding last month and will add time-definite guaranteed heavy air freight to its portfolio across the globe.
For the full year ended Dec. 31, 2004, consolidated revenue increased 9.2% to a record $36.6 billion, while operating profit rose 12.2% to $5 billion. Net income for the year totaled $3.3 billion, up 15% compared to the $2.9 billion reported in 2003.
Excluding the impact of the items noted above, operating profit for the full year rose 16.1% to $5.2 billion; net income rose 19.1% to $3.3 billion, and earnings per diluted share totaled $2.90 in 2004 compared to $2.44 in 2003.
Davis said the company is expecting a solid period of growth in 2005. The international segment should continue its exceptional performance with strong export volume growth. U.S. domestic volume should grow 2-to-3% for the year with improving operating margins. UPS Supply Chain Solutions will add more than $1 billion in revenue as a result of the acquisition of Menlo Worldwide Forwarding.
Davis reiterated the company’s expectation that total earnings per share for 2005 will grow 13-to-17% over the adjusted $2.90 reported for 2004. The CFO said UPS generated $3.5 billion in free cash flow in 2004 and will continue to generate substantial positive cash flow in 2005.
For the first quarter, UPS is projecting diluted earnings per share in a range of $0.70 to $0.75 compared to the $0.67 reported during the prior-year period.
“In 2004, we grew our ground business, we grew our air business, we grew our international business and we delivered more packages than ever before,” Davis concluded. “We’re optimistic about 2005 and confident in our ability to continue producing the type of consistent earnings growth for which we’re known. Opportunities like the integration of Menlo Worldwide Forwarding, with another 400 sales personnel, and the agreement to take direct control of our international express operations in China, will help us to continue executing our global growth strategy.”
"UPS continues to expand our capabilities in Asia, particularly in China, in line with our vision to synchronize commerce to better serve our customers,” said Ken Torok, president of UPS Asia Pacific. “In the past quarter, beyond taking direct control of our international express operations in China, we began flying six of 12 new frequencies to China and announced an order for 10 Airbus 380 freighters which will allow us to fly non-stop from major Asian cities to our hubs in the U.S.”
UPS is the world’s largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS's stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at UPS.com.
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