Tag Archives: UPS

UPS produces an operating profit of $1.5 billion in the first quarter, down $106 million due to harsh winter weather

UPS (United Parcel Service) (UPS Airlines) (Atlanta) today released first quarter 2014 results. Diluted earnings per share totaled $0.98, a $0.06 decline from first quarter 2013 adjusted results. Operating profit for the quarter was $1.5 billion, down $106 million from the prior-year’s adjusted results. Unusually harsh weather weighed on operating profit by approximately $200 million, due to increased expenses and slower revenue growth. Average daily shipments in the U.S. climbed 4.2% driven primarily by large e-commerce shippers using lightweight deferred shipping solutions.

The International segment operating margin expanded to 14.0% on daily volume growth of 7.9%. Supply Chain and Freight experienced improved operating profit and margin expansion.

For the first quarter of 2013, UPS reported diluted earnings per share of $1.08, which includes $36 million in after-tax gains related to the attempted acquisition of TNT.

“Much of the U.S. economy was negatively affected by the severe weather conditions in the first quarter, resulting in lower UPS operating results versus the prior year,” said Scott Davis, UPS chairman and CEO. “International and the Supply Chain and Freight segment benefitted from positive momentum during the quarter as customers utilized the strategic investments made by UPS to strengthen our portfolio.”

Cash Flow

For the three months ended March 31, UPS generated $1.9 billion in free cash flow. The company paid dividends of $596 million, up 8.1% per share over the prior year, and repurchased 6.8 million shares for approximately $660 million.

U.S. Domestic Package

U.S. Domestic revenue increased 2.6% over the prior-year period, to $8.5 billion. Daily volume improved 4.2%, led by UPS SurePost and UPS Second Day Air.

The segment generated $927 million in operating profit, down $158 million compared to the prior year, due to the impact of severe winter weather. The company experienced lost revenue and additional cost as a result of significant network disruptions on more than half of the operating days during the quarter. Overtime wages, purchased transportation and snow removal costs increased substantially over the prior year. Operating margin contracted 220 basis points to 10.9%.

Revenue per package declined 1.5% from the previous year due to changes in customer and product mix, as well as lower fuel surcharges. Product mix continues to be impacted by the rapid increase of UPS SurePost. More e-commerce retailers are choosing this product to serve their value-conscious customers.
International Package

The International segment revenue improved 5.0% and produced operating profit of $438 million, 12% more than the prior-year adjusted results. Operating margin expanded to 14% driven by improved network efficiency and in-country leverage.

On a reported basis, the segment recorded operating profit growth of 24% more than the prior-year result of $352 million. This reflects the operating profit impact of a $39 million net charge in 2013, related to the attempted acquisition of TNT.

Export shipments climbed 7.7% driven by 15% growth in Europe and modest gains in Asia and the Americas. Transborder shipments in Europe continue to expand rapidly as customers migrate to Pan-European distribution using UPS solutions.

To support strong Intra-European growth and intercontinental trade, the company announced the completed expansion of its Cologne, Germany, air hub. This $200 million investment increased facility capacity by 70%.
Non-U.S. Domestic deliveries increased 8.1%, driven by growth in Europe and Canada. Poland led the European countries with more than 20% growth, while Germany and the U.K. contributed strong gains.

Average revenue per package declined 2.1% due to product mix changes as non-premium Export products jumped almost 13%, overshadowing improved growth in premium products.

Supply Chain & Freight

Supply Chain and Freight operating profit increased 3.5% to $148 million. Operating margin expanded 30 basis points to 6.8%, driven by gains in the Forwarding and Distribution units.

The Forwarding business delivered improved operating profit and margin gains during the quarter as the unit adapted to market changes. International Air Freight growth in shipments and tonnage were offset by lower revenue per pound. Ocean Freight and Brokerage showed both improved revenue and operating profit.
Gains from retail and healthcare customers drove higher revenue growth in the Distribution business unit.

Operating profit improved more than 10% despite additional expansion costs during the quarter.

UPS Freight revenue increased slightly on a 3.1% increase in LTL revenue per hundredweight. Both tonnage and operating profit were negatively impacted by the severe winter weather.

Outlook

“During the quarter, the momentum of the underlying business was masked by the disruption of inclement weather,” said Kurt Kuehn, UPS chief financial officer. “We are encouraged by the positive trends in our business and expect the remainder of the year to perform as we originally guided. However, due to the challenging start to 2014, we anticipate diluted earnings per share to be at the low end of our full-year guidance range of $5.05 to $5.30.”

Copyright Photo: Tony Storck/AirlinersGallery.com. Boeing 767-34AF ER N328UP (msn 27754) in Blended Winglets prepares to land at Philadelphia International Airport (PHL).

UPS Airlines: AG Slide Show

 

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: AG Slide Show

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: AG Slide Show

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
Adjusted
Consolidated Results
4Q 2012
4Q 2012
4Q 2011
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: AG Slide Show

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: AG Slide Show

TNT: AG Slide Show

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

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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: AG Slide Show

TNT Airways: AG Slide Show