Christmas overspend flattens UPS earnings

03 / 02 / 2015

UPS reported “flat” fourth quarter earnings in the fourth quarter of 2014 compared with the same period in prior year. In fact, earnings per share, at $1.25, were identical to 2013, said the US-based express carrier.

It blamed higher than expected peak operating expenses in its home market as the carrier sought to maintain delivery times - UPS delivered 1.3bn packages during the fourth quarter, an increase of 8.1 per cent over the same period last year.

"UPS customers were delighted with the high quality service we delivered during the holiday season," said chief executive officer, David Abney. "However, the financial results were below our expectations.” He promised to “address this disparity with both cost and revenue actions" in 2015.

International revenue, on a currency-neutral basis, increased 5.9 per cent to $3.4bn – although currency fluctuations took $40m off this figure compared with 2013 - with 4.3 per cent growth in daily package volume.

Export shipments were up 5.2 per cent, driven primarily by 8.5 per cent growth from Europe, offset somewhat by a decline in Asia export volume. Non-U.S. domestic products were up 3.6 per cent with strong growth in Canada, Spain and Mexico.

Export yield contracted 1.7 per cent on a currency-neutral basis, as a result of lower fuel surcharges, product mix and stronger intra-regional shipment growth.

Revenue in the supply chain and freight segment increased 7.4 per cent to$2.5bn, with growth in distribution and UPS Freight.

Adjusted operating profit increased 4.7 per cent to $179m with improvements in distribution and UPS Freight offset by declines in the Forwarding unit, where gains in North American air freight and ocean were offset by “challenges” in international air freight.

Chief financial officer Kurt Kuehn foresees “continuous improvement and advances in strategic initiatives that have great potential for the company" during 2015. "E-commerce growth, operations technology implementation, emerging market expansion and industry specific solutions will provide momentum for UPS.”

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