Category Archives: UPS-United Parcel Service

UPS posts a net profit of $1.2 billion for 2013

UPS (United Parcel Service) (UPS Airlines) (Atlanta) posted net earnings of $1.2 billion for 2013. The company issued this full financial statement for the fourth quarter and 2013:

UPS released details regarding fourth quarter 2013 results. Diluted earnings per share totaled $1.25, a $0.07 decline from 2012 fourth quarter adjusted results. Average daily package volume increased 6.0%, as total deliveries in December surged 20%. Significantly higher than predicted volume and inclement weather contributed to excess operating costs in the U.S., negatively affecting results.

During the fourth quarter 2012, UPS reported a diluted earnings per share loss of $1.83, due to an after-tax, non-cash charge of $3.0 billion to account for a mark-to-market pension adjustment.

“As the retail market shifts to a direct-to-consumer model, more and more companies are leveraging UPS solutions,” said Scott Davis, UPS chairman and CEO. “As a result, we experienced an unprecedented increase in volume, exceeding even our most optimistic plans.

“The increased volume put a strain on our network, causing delays. In response, UPS deployed additional people and equipment, placing a greater emphasis on service than cost,” Davis explained. “UPS will make the necessary investments and operational improvements to ensure we meet the needs of the marketplace.”

The company expects full-year diluted earnings per share to be within a range of $5.05 to $5.30, an increase of 11%-to-16% over 2013 adjusted results.

UPS delivered 20 million packages per day during the fourth quarter. Total shipments in 2013 increased to 4.3 billion, a 3.9% improvement over 2012.

During the holiday period, global daily deliveries exceeded expectations by surpassing 29 million packages on five days, with peak volume exceeding 31 million on December 23. Also during this period, UPS experienced 10 days with delivery volume that exceeded the company’s previous high.

Cash Flow

For the year ended Dec. 31, UPS generated $5.3 billion in free cash flow, producing a net income-to-cash conversion ratio of more than 120%. The company paid dividends of $2.3 billion, an increase of nearly 9% per share over the prior year, and repurchased more than 43 million shares for approximately $3.8 billion.

U.S. Domestic Package

U.S. Domestic fourth quarter revenue improved 4.2% to $9.3 billion. Daily package volume increased 5.6% with Deferred and Ground leading the way, up 8.0% and 5.8% respectively.

Total revenue per package declined 1.3%, as lower fuel surcharges, changes in product and customer mix, as well as higher service refunds, contributed to the drop. Shippers continue to utilize the UPS portfolio, choosing lower cost over faster delivery, as evidenced by more than 30% growth in UPS SurePost.

Operating profit totaled $1.2 billion as additional costs associated with a greater-than-expected surge in volume and weather led to a $178 million decline from the prior-year adjusted results. Increased compensation and benefit costs reflected the deployment of additional resources in an attempt to meet service commitments. During the quarter, UPS exceeded seasonal hiring targets by more than 30,000, deploying a total of 85,000 temporary employees. In addition, the company experienced significantly higher purchased transportation expenses.

On a reported basis, the operating loss for the fourth quarter of 2012 totaled $1.8 billion as a result of the mark-to-market pension charge.

International Package

International revenue increased 5.3% to $3.4 billion on 8.8% growth in daily package volume. UPS Export products rose 9.5% per day, driven primarily by 13% growth in Europe and significant growth in the Asia-to-Europe trade lane. Non-U.S. domestic products were up 8.2% with strong growth in Poland, Italy, and Canada. During December, the segment achieved a peak volume day above four million pieces and exceeded last year’s high on 11 days.

Export yield declined 3.4% on a currency neutral basis, as a result of lower fuel surcharges and customer preference for non-premium products. Double-digit gains in Pan-European shipments also lowered revenue per piece.

Operating profit improved 7.6% to $537 million. Operating margin expanded 30 basis points to 15.9%, compared to last year’s adjusted results.

On a reported basis, the operating loss for the fourth quarter of 2012 totaled $442 million as a result of the mark-to-market pension charge.

Supply Chain & Freight

Revenue in the segment fell 5.8% to $2.3 billion, due to declines in the Freight Forwarding unit. Operating profit was flat compared to 2012 adjusted results, as improvements in Distribution offset declines in Forwarding and UPS Freight.

On a reported basis, the operating loss for the fourth quarter of 2012 was $541 million as a result of the mark-to-market pension charge.

The Forwarding unit experienced a revenue decline resulting from decreased tonnage and revenue per kilo, in International Air Freight. The Ocean Freight business reported growth in shipments and operating margin expansion.

Distribution revenue increased over the prior year period. The retail and healthcare sectors contributed to the improved results. Global footprint expanded during the year to 284 facilities, with more than 22 million square feet of space.

UPS Freight LTL revenue increased 2.3% over the prior year driven by LTL tonnage and pricing improvements.

Outlook

The company announced plans to repurchase $2.7 billion of UPS shares during 2014. Capital expenditures are anticipated to be approximately $2.5 billion. This includes accelerated deployments in operational technologies and over $500 million of increased investments in capacity expansion and hub modernization.

“While the year ended on a challenging note, we are confident in our ability to adapt and we expect much better results in 2014,” said Kurt Kuehn, UPS chief financial officer. “UPS expects balanced profitability growth across all segments in a slightly better economic environment, resulting in full-year guidance of diluted earnings per share of $5.05 to $5.30, an 11%-to-16% increase over our 2013 adjusted results.”

Copyright Photo: Keith Burton/AirlinersGallery.com. Boeing 757-24A (PF) N416UP (msn 23903) prepares to arrive in Las Vegas.

UPS Airlines:

Bloomberg visits UPS’ sorting hub at UPS Worldport, Louisville, Kentucky:

UPS reports its financial results for the third quarter

UPS (United Parcel Service) (UPS Airlines) (Atlanta) has announced diluted earnings per share of $1.16 for the third quarter of 2013, a 9.4% improvement over adjusted results for the same period last year. Total revenue was $13.5 billion, up 3.4% driven primarily by U.S. e-commerce shipments and strong European export growth.

For the three months ended Sept. 30, 2013, UPS delivered more than one billion packages worldwide, an increase of 4.6% over the prior-year period.

Daily package volume growth was led by International export and U.S. Domestic Ground, up 6.7% and 3.0%, respectively. Customers around the globe continue to seek lower cost solutions as demonstrated by the 11% jump in International deferred export products per day.

Last year, on a reported basis, third quarter diluted earnings per share was $0.48 as a result of an after-tax, non-cash charge of $559 million to restructure pension liabilities for certain employees.

“UPS is continuing to build global capabilities that position the company to meet the evolving supply chain needs of customers,” said Scott Davis, UPS chairman and CEO. “We are making investments in emerging markets, healthcare distribution and our worldwide retail delivery models, ensuring that UPS delivers both the solutions customers require and the returns our shareowners expect.”

Cash Flow

For the nine months ended Sept. 30, UPS generated $3.6 billion in free cash flow after capital expenditures of $1.6 billion. The company paid dividends of $1.7 billion, an increase of nearly 9% per share over the prior year, and repurchased 33 million shares for $2.9 billion.

U.S. Domestic Package

U.S. Domestic third quarter operating profit was $1.2 billion, up nearly 16%, and operating margin expanded 140 basis points over the prior year adjusted result, to 14.4%. Revenue increased 5.0% to $8.3 billion. Volume growth, cost reductions due to efficiency gains and safety improvements, as well as the benefit of one additional operating day, contributed to the improvement.

On a reported basis, third quarter 2012 U.S. Domestic operating profit was $129 million and operating margin was 1.6% as a result of the pension restructuring charge.

Total U.S. Domestic revenue per piece was up 1.0%, as higher base rates were mostly offset by lower fuel surcharges, decreased average package weight and changes in both product and customer mix.

Daily package volume was 2.3% higher than the same period last year, driven by e-commerce shipments with growth in both B2C and B2B. Next Day Air volume declined 3.3% due to a contraction in letter shipments.

International Package

International revenue increased 2.5% to $3.0 billion on daily package volume improvement of 6.5%. Daily export shipments were 6.7% higher, with European exports up nearly 10%, while growth out of Asia was flat. Non-U.S. Domestic volume was up 6.3%, driven by strong growth across Europe and Canada.

Total operating profit was $417 million, a decline of $32 million on a year-over-year basis, due to a $75 million negative impact from currency and fuel. Operating margin of 13.8%, remains industry leading.

Currency-neutral export revenue per piece declined 5.4%, primarily driven by growth in lower-yielding deferred products. Lower fuel surcharges and changes in trade lane mix also pressured yields.

UPS has expanded its presence and service portfolio in Mexico, helping businesses bring manufacturing closer to U.S. consumers. Recently announced offerings include the industry’s first guaranteed ground service from the U.S., Preferred LCL Ocean service from Asia and expanded retail presence in Northern Mexico.

Supply Chain & Freight

Operating profit improved 7%, to $201 million and operating margin expanded 60 basis points, to 8.9%. Revenue in the segment was down slightly from the prior year period to $2.25 billion, as growth in UPS Freight was offset by declines in the Forwarding business.

The Distribution business improved operating profit and margin despite continued investment in Healthcare infrastructure and technology. Revenue growth in Healthcare and Mail Services was offset by a decline in the High Tech sector.

In Forwarding, both operating profit and margin expanded. Growth in Ocean forwarding and Brokerage, as well as cost management activities, drove the improvement.

UPS Freight LTL revenue climbed 5.5% as a result of improved tonnage and rate increases. Operating margin for the business unit declined slightly, due to higher compensation and benefit expense.

Copyright Photo: Ivan K. Nishimura/AirlinersGallery.com. UPS Airlines’ McDonnell Douglas MD-11 (F) N286UP (msn 48453) taxies at Honolulu.

UPS:

UPS’ Airbus A300F4-622R N155UP crashes on approach to Birmingham, Alabama

UPS Airlines’ (UPS-United Parcel Service) (Atlanta and Louisville) Airbus A300F4-622R N155UP (msn 841) crashed this morning while on approach from the north to Birmingham-Shuttlesworth International Airport, Birmingham, Alabama. The crew was operating cargo flight 5X 1354 from the Louisville hub to Birmingham. There were some showers in the area at the time of the accident. The two crew members were tragically killed in the crash.

The crash scene at Birmingham (NTSB):

NTSB Final Briefing:

Bottom Copyright Photo: Ken Petersen/AirlinersGallery.com. N155UP is pictured on the cargo ramp at New York’s John F. Kennedy International Airport before the tragic accident.

UPS Airlines:

The GCAA of the United Arab Emirates issues its final accident report on the UPS Boeing 747-44AF N571UP on September 3, 2010 near Dubai

UPS Airlines‘ (UPS-United Parcel Service) (Atlanta and Louisville) Boeing 747-44AF N571UP (msn 35668) crashed shortly after takeoff from Dubai on September 3, 2010. The General Civil Aviation Authority (GCAA) of the United Arab Emirates (UAE) has issued its final accident report.

Accident Synopsis:

On September 3rd 2010, a Boeing 747-44AF departed Dubai International Airport [DXB] on a scheduled international cargo flight [SCAT-IC] to Cologne [CGN], Germany.

Twenty two minutes into the flight, at approximately 32,000 feet, the crew advised Bahrain Area East Air Traffic Control [BAE-C ] that there was an indication of an on-board fire on the Forward Main Deck and
declared an emergency.

Bahrain Air Traffic Control advised that Doha International Airport [DOH] was ‘at your ten o’clock and one hundred miles, is that close enough?’, the Captain elected to return to DXB, configured the aircraft for the return to Dubai and obtained clearance for the turn back and descent.

A cargo on the main cargo deck had ignited at some point after departure. Less than three minutes after the first warning to the crew,the fire resulted in severe damage to flight control systems and caused the upper deck and cockpit to fill with continuous smoke.

The crew then advised Bahrain East Area Control [BAE-C] that the cockpit was ‘full of smoke’ and that they ‘could not see the radios’, at around the same time the crew experienced pitch control anomalies during the turn back and descent to ten thousand feet.

The smoke did not abate during the emergency impairing the ability of the crew to safely operate the aircraft for the duration of the flight back to DXB.

On the descent to ten thousand feet the captains supplemental oxygen supply abruptly ceased to function without any audible or visual warning to the crew five minutes and thirty seconds after the first audible warning. This resulted in the Captain leaving his position. The Captain left his seat and did not return to his position for the duration of the flight due to incapacitation from toxic gases.

The First Officer[F.O], now the Pilot Flying [PF] could not view outside of the cockpit, the primary flight displays, or the audio control panel to retune to the UAE frequencies.

Due to the consistent and contiguous smoke in the cockpit all communication between the destination [DXB] and the crew was routed through relay aircraft in VHF range of the emergency aircraft and BAE-C. BAE-C then relayed the information to the Emirates Area Control Center (EACC) in the UAE via landline, who then contacted Dubai ATC via landline.

As the aircraft approached the aerodrome in Dubai, it stepped down in altitude, the aircraft approached DXB runway 12 left (RWY 12L), then overflew the northern perimeter of the airport at 4500 ft at around 340 kts . The PF could not view the Primary Flight Displays [PFD] or the view outside the cockpit.

The PF was advised Shajah International Airport [SHJ] was available at 10 nm. This required a left hand turn, the aircraft overflew DXB heading East, reduced speed, entering a shallow descending right-hand turn to the south of the airport before loss of control in flight and an uncontrolled descent into terrain, nine nautical miles south west of Dubai International Airport.

There were no survivors.

Read the full report including the causes: CLICK HERE

Copyright Photo: Michael B. Ing/AirlinersGallery.com. N571UP is pictured departing from Anchorage International Airport prior to the accident in Dubai.

UPS starts to add Blended Winglets to its Boeing 767-300F freighters

UPS Airlines (United Parcel Service) (Atlanta and Louisville) has unveiled a new look for its flagship Boeing 767 fleet by adding winglets as a part of its sustainability efforts to save fuel and reduce emissions.

These wingtip devices, which are arrow-shaped surfaces attached to the tip of each wing, enhance the overall efficiency of the aircraft, saving fuel by reducing drag while also lowering noise emissions by improving take-off performance. The modifications will save UPS more than six million gallons of fuel each year and reduce carbon dioxide emissions by more than 62,000 metric tonnes. UPS estimates approximately a four percent fuel savings on each 767 flight.

“UPS continues to lead the industry in sustainable business practices,” said David Abney, UPS chief operating officer. “With the widest portfolio of services in the industry, we are constantly looking for ways to reduce emissions, and drive down operating costs so our customers have the solutions they need to compete in a global economy. These winglets are a perfect example of sustainability in action. They are good business and good stewardship.”

UPS currently operates 54 of the 767 aircraft with five on order. The company plans to have winglets on all 767 aircraft by the end of 2014. Winglets are already installed on UPS’s 747, and MD-11 fleets, and the A300-600 has a similar device called a wingtip fence.

The modifications will add approximately five and a half feet of span to each wing, and each winglet is 11 feet tall. Aircraft weight will increase by nearly 3,000 pounds due to the weight of the winglets and the extensive structural reinforcement of the wing structure. Even at this size and weight, the winglets will still reduce the amount of fuel used per flight.

Winglets improve the aerodynamics of the wing by extending the length of the wing and reducing the amount of drag, which is the force that opposes an aircraft’s motion in the air.

The winglet project is a sustainability initiative implemented by UPS Airlines. The company already operates one of the cargo sector’s youngest and most fuel-efficient air fleet, and is working to reduce its carbon intensity an additional 20 percent by 2020 from a 2005 baseline. Other highlights of the airline’s fuel conservation efforts include computer-optimized flight routes, aircraft taxi time management, and alternate-fuel ground support equipment.

Copyright Photo: Joe G. Walker. The first, Boeing 767-34AF ER N304UP (msn 27242) lands at Boeing Field (King County) in Seattle with the new device.

UPS:

UPS reports record earnings per share

UPS (United Parcel Service) (UPS Airlines) (Atlanta and Louisville) announced record 2012 fourth quarter and full year adjusted diluted earnings per share of $1.32 and $4.53 respectively, with the U.S. Domestic segment leading the way. The company generated annual free cash flow of approximately $5.4 billion, a testament to operations execution and the emphasis UPS places on capital efficiency. UPS estimates that Hurricane Sandy reduced earnings per share by approximately $0.05.

UPS recorded a fourth quarter mark-to-market, non-cash, after-tax charge of $3.0 billion for its company-sponsored pension and post-retirement benefit plans. Although the plans exceeded their expected rate of return, these incremental gains were more than offset by a 120 basis point decline in year-end discount rates. As a result, on a GAAP basis, diluted earnings per share for the quarter fell to a loss of $1.83. For the full year, reported diluted earnings per share were $0.83. This adjustment does not affect cash flow, required pension funding or benefits paid to plan participants.

UPS expects full year earnings per share to be within a range of $4.80 – $5.06, an increase of 6-to-12% compared to 2012 adjusted results. The company also raised guidance for 2013 share repurchases from $1.5 billion to $4.0 billion.

Adjusted

Consolidated Results

4Q 2012

4Q 2011

Revenue

$14.57 B

$14.17 B

Operating profit (loss)

($2.78 B

)

$2.05 B

$1.20 B

$2.02 B

Operating margin

(19.1 %

)

14.1 %

8.4 %

14.3 %

Average volume per day

18.8 M

18.3 M

Diluted earnings (loss) per share

($1.83

)

$1.32

$0.74

$1.28

During the year, UPS delivered more than four billion packages. For the quarter, it delivered 18.8 million pieces per day, an increase of 2.9% over the prior-year period.

Overall consumer spending for holiday shopping fell slightly below expectations, however; UPS still delivered more than 500 million packages, including almost 28 million on its peak day, both new records.

Cash Position

For the year ending Dec. 31, UPS generated $5.4 billion in free cash flow after capital expenditures of $2.2 billion. UPS repurchased 21.8 million shares for approximately $1.6 billion and paid dividends totaling $2.1 billion, up 9.6% per share.

Copyright Photo: Joe G. Walker. Boeing 747-45E (BCF) N579UP (msn 26062) climbs away from Anchorage International Airport (ANC).

UPS-United Parcel Service:

UPS to drop its bid to acquire TNT Express due to expected EC disapproval

United Parcel Service Inc (UPS) (UPS Airlines) (Atlanta and Louisville) will drop its bid to acquire TNT Express N.V. (Hoofddorp) because it now expects the European Commission (EC) to deny the acquisition.

On March 19, 2012, UPS announced its intention to acquire TNT Express for $6.7 billion. On September 5, 2012, UPS announced it expected to close the deal in early 2013 subject to EC approval.

UPS will pay TNT a termination fee in the amount of EUR 200 million.

TNT Airways (Liege) is a subsidiary of TNT Express. TNT is now expected to remain independent.

UPS issued the following statement:

United Parcel Service, Inc. announced today (January 14) the European Commission (EC) has informed UPS and TNT Express that it is working on a decision to prohibit the proposed acquisition of TNT Express.

UPS submitted an initial remedies proposal on November 29, 2012 and subsequently revised the proposal twice. UPS began the competitive review process with the EC in March 2012.

Scott Davis, UPS Chairman and CEO said, “We are extremely disappointed with the EC’s position. We proposed significant and tangible remedies designed to address the EC’s concerns with the transaction. The combined company would have been transformative for the logistics industry, bringing meaningful benefits to consumers and customers around the world, while supporting growth in Europe in particular.”

Upon prohibition by the EC, the Offer Condition relating to EU Competition Clearance will not be fulfilled and UPS will pay TNT a termination fee in the amount of EUR 200 million and will withdraw the Offer.

Further announcements will be made once the European Commission has issued its formal decision. The decision is expected to be adopted formally in the coming weeks.

Top Copyright Photo: Michael B. Ing. Boeing 747-44AF N572UP (msn 35669) climbs away from Anchorage International Airport (ANC).

UPS:

TNT:

Bottom Copyright Photo: Rainer Bexten. Southern Air’s Boeing 777-FHT N778SA (msn 39286) arrives at the Liege, Belgium sorting facility.

UPS and TNT Express send their merger “remedies” paperwork to the European Commission

United Parcel Service, Inc. (Atlanta and Louisville) and TNT Express N.V. (Hoofddorp) (TNT Airways) have announced, in line with Dutch disclosure requirements, that remedies have been submitted to obtain competition clearance from the European Commission (EC) for the acquisition of TNT Express by UPS. The offer of remedies does not change the terms and conditions of the Offer by UPS for TNT Express.

The proposed remedies aim to address the EC’s concerns regarding the competitive effects of the intended merger on the international express small package market in Europe. UPS and TNT Express continue to be fully committed to the merger and are working closely with the EC in order to gain competition clearance allowing completion of the transaction in early 2013. As part of the approval process, the EC will market-test the remedies on a confidential basis.

The proposed remedies comprise the sale of business activities and assets in combination with granting access to air capabilities. Eligible buyers of these activities will have to ensure the long-term viability of the divested activities and continuity of customer service.

No further details of the confidential discussions or proposed remedies will be revealed at this stage. The discussions are ongoing, which means that the offered remedies may be subject to change.

UPS and TNT Express believe their merger will help create a more efficient logistics market, thereby improving the competitiveness of Europe and the solutions offered to businesses and consumers. Customers and consumers will benefit from a broader portfolio of services and better global access, along with lower supply-chain costs overall and improved service levels in terms of timing and reliability.

UPS and TNT Express value their employees highly. Both UPS and TNT Express will follow the required consultation and advice procedures with their works councils with regard to these remedies.

In accordance with EU Merger Regulation, the timing of the remedies submission extends the EC’s review period by 15 business days to February 5, 2013.

Copyright Photo: Michael B. Ing. UPS’ Boeing 747-44AF N571UP (msn 35668) climbs away from Anchorage International Airport.

UPS-United Parcel Service:

TNT Airways:

International growth fuels UPS to a third quarter operating profit

UPS-United Parcel Service (UPS Airlines) (Atlanta) reported yesterday (October 23) on its third quarter financial results. Here is the statement by the company:

UPS) has announced third quarter 2012 adjusted diluted earnings per share of $1.06. The International segment led the way with its highest third quarter in history generating $449 million in operating profit, up 7.7% over the prior-year period. UPS updated its full-year 2012 guidance for adjusted diluted earnings per share to a range of $4.55 to $4.65, reflecting greater confidence in fourth quarter execution.

On a reported basis, third quarter 2012 earnings per share were $0.48. In August, the company announced a decision to restructure pension liabilities for certain employees. As a result, UPS recorded an after-tax, non-cash charge of $559 million during the quarter.

“Our results were achieved in an environment of slowing global trade and changing market dynamics,” said Scott Davis, UPS chairman and CEO. “This not only highlights the flexibility of our business model; it illustrates the breadth of the UPS product portfolio in meeting the needs of customers.”

		Adjusted
Consolidated Results	3Q 2012	3Q 2012	3Q 2011
Revenue	$13.07 B		$13.17 B
Operating profit	$0.77 B	$1.66 B	$1.67 B
Operating margin	5.9 %	12.7 %	12.7 %
Average volume per day	15.5 M		15.1 M
Diluted earnings per share	$0.48	$1.06	$1.09

During the quarter, UPS delivered 15.5 million packages per day, a 2.9% increase over the prior-year period.

Cash Position

For the nine months ending Sept. 30, UPS generated free cash flow in excess of $3.6 billion. The company repurchased 18.5 million shares for approximately $1.4 billion and paid dividends totaling $1.6 billion, a 9.6% increase per share over the prior year.

Capitalizing on credit market conditions, during the quarter UPS issued $1.75 billion of debt. Proceeds will be used to pay notes that mature in January 2013. The company ended the period with $9.0 billion in cash and marketable securities. The primary uses of these funds will be the acquisition of TNT Express and debt repayment.

		Adjusted
U.S. Domestic Package	3Q 2012	3Q 2012	3Q 2011
Revenue	$7.86 B		$7.77 B
Operating profit	$129 M	$1,025 M	$1,046 M
Operating margin	1.6 %	13.0 %	13.5 %
Average volume per day	13.2 M		12.7 M

U.S. Domestic revenue increased $94 million over the prior-year period, driven by a 3.7% gain in daily package volume. Adjusted operating profit declined $21 million, impacted negatively by one less operating day and the timing of the fuel surcharge.

On a reported basis, operating profit was $129 million as a result of the pension restructuring previously mentioned.

Rapid e-commerce growth drove gains in daily volume, with Ground and Deferred up 3.0% and 9.3%, respectively. Next Day Air volume expanded 5.7% over the prior-year period, as retailers continued to utilize UPS Next Day Air Saver to differentiate their offerings.

Base rate improvements were more than offset by lower fuel surcharges, and changes in product and customer mix. Consequently, revenue per package declined 0.8% from the same quarter last year.

International Package	3Q 2012	3Q 2011
Revenue	$2.94 B	$3.06 B
Operating profit	$449 M	$417 M
Operating margin	15.3 %	13.6 %
Average volume per day	2.3 M	2.3 M

The International segment produced operating profit of $449 million, its highest third quarter ever. Operating margin was up 170 basis points over the prior-year period to 15.3%. Export package growth, network changes and currency translation contributed to this improvement.

Revenue declined 3.7%, as the impact from lower fuel surcharges and currency exceeded the benefit from the 1.2% growth in daily Export volume.

For the first time in several quarters, Asia exhibited growth in Export package volume, benefitting from product launches and easier comparisons. Although the rate of growth in Europe has slowed, it remained positive.

Supply Chain and Freight	3Q 2012	3Q 2011
Revenue	$2.27 B	$2.34 B
Operating profit	$188 M	$203 M
Operating margin	8.3 %	8.7 %

Operating margin for the Supply Chain and Freight segment remained strong at 8.3%. Operating profit was down $15 million, as declines in Forwarding were partially offset by improvement in UPS Freight.

The Freight Forwarding unit was pressured by overcapacity in the market, especially out of Asia. Revenue decreased as lower yields offset modest tonnage gains.

Although the Distribution unit experienced strong revenue growth, investments in healthcare capabilities and infrastructure weighed on margin expansion. Recently, UPS opened three new healthcare distribution facilities in Sydney, Australia and in Shanghai and Hangzhou, China.

UPS Freight revenue increased 3.6% as shipments per day were up slightly. LTL revenue per hundredweight and gross weight hauled improved over the prior year period, resulting in operating margin expansion.

Outlook

“UPS performance this quarter reflects the ability of our global network to adapt to soft macro conditions,” said Kurt Kuehn, UPS chief financial officer.

“While there is some uncertainty around the magnitude of the holiday shopping season, we are confident in UPS’s ability to deliver,” Kuehn continued. “As a result, we enhanced our guidance by narrowing the range, maintaining our previous midpoint. We anticipate 2012 adjusted diluted earnings per share to be within a range of $4.55 to $4.65, an increase of 5%-to-7% over 2011 adjusted results.”

Copyright Photo: Michael B. Ing. McDonnell Douglas MD-11 (F) N292UP (msn 48566) completes its final approach into Tokyo (Narita).

UPS:

FedEx will have to compete with UPS for the U.S. Postal Service contract

FedEx Express (Memphis) has been informed by the U.S. Postal Service it will have to bid for a new postal contract that is expiring in September 2013 according to this report by Reuters. This will open the door for UPS-United Parcel Service (Atlanta) to bid on the contract. According to Reuters, “FedEx is the postal service’s top contractor, earning an estimated $1.5 billion in revenue in fiscal 2011, according to Husch Blackwell LLP’s postal service contracting practice group.”

Read the full report: CLICK HERE

FedEx Express: