UPS Supply Chain and Freight operating profit surges in Q2

International benefitted from its highly flexible network and by targeting growth markets within the company’s diverse revenue base
Ups, Q2, Business, Express logistics

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UPS announced second-quarter 2019 adjusted earnings per share of $1.96 with rising demand for next-day service resulting in strong financial results in the U.S. and leveraged asset-light and proven cost management strategies in the International and Supply Chain and Freight segments.

“Our Transformation initiatives are generating greater efficiencies across the network and, when combined with our growth strategies, UPS achieved profit growth in all segments,” said David Abney, UPS chairman and CEO. “We also announced a very extensive roll-out of new products and services such as UPS My Choice for Business, expanded UPS Access Points, and UPS Worldwide Economy, among others, for small- and medium-sized businesses, all designed to generate additional profitable growth.”

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Amounts presented on an adjusted basis exclude Transformation strategy costs. Second-quarter 2019 adjusted results exclude a pre-tax charge of $21 million, or $0.02 per share after tax.  Second-quarter 2018 adjusted results excluded a pre-tax charge of $263 million, or $0.23 per share after tax, primarily from the UPS Voluntary Retirement Program.

Consolidated Results

2Q 2019

Adjusted

2Q 2019

2Q 2018

Adjusted

2Q 2018

Revenue

$18,048 M

$17,456 M

Net Income

$1,685 M

$1,702 M

$1,485 M

$1,685M

Diluted Earnings Per Share

$1.94

$1.96

$1.71

$1.94

* “Adjusted” and “as adjusted” amounts presented in this release are non-GAAP financial measures. See the appendix to this release for a discussion of non-GAAP financial metrics, including a reconciliation to the most closely correlated GAAP measure.

For the total company in 2Q 2019:

  • Consolidated revenue increased 3.4% to $18 billion, driven by gains in average daily volume in the U.S. and higher-quality, currency-neutral revenue in the International segment. 
  • Total operating profit grew nearly 21%, and 6.3% on an adjusted basis, with growth in all segments.
  • Total operating margin expanded 170 basis points; adjusted operating margin expanded 30 basis points.
  • Capital expenditures for the year are approximately $2.9 billion to support network enhancements.
  • Year-to-date dividends per share increased 5.5% and the company repurchased 4.8 million shares for approximately $500 million.

International benefitted from its highly flexible network and by targeting growth markets within the company’s diverse revenue base. The segment generated its best second-quarter profit in history and expanded adjusted operating margins while navigating areas of trade uncertainty.

2Q 2019

Adjusted

2Q 2019

2Q 2018

Adjusted

2Q 2018

Revenue

$3,505 M

$3,602 M

Operating profit

$663 M

$665 M

$618 M

$654M

  • International volume slightly declined due to global macroeconomic pressure and tough year-over-year comparisons, as 2Q 2018 exports grew 9.5%.
  • Total revenue per piece fell less than 1%, but grew nearly 2% when adjusting for currency.
  • International domestic revenue per piece rose 0.3%, an increase of 5.6% on a currency-neutral basis.
  • Operating profit increased more than 7%, or by 1.7% on an adjusted basis.

Supply Chain and Freight Segment

Supply Chain and Freight grew operating profit to more than $270 million, a double-digit increase for the quarter. Successful cost management enabled by the company’s asset-light strategies delivered strong financial results while revenue was pressured by softer trade.

2Q 2019

Adjusted

2Q 2019

2Q 2018

Adjusted

2Q 2018

Revenue

$3,393M

$3,500 M

Operating profit

$272 M

$273 M

$216 M

$247M

“UPS grew profits across all business segments,” said Richard Peretz, UPS’s chief financial officer. “Our performance was driven by the efficiencies created by investments in our network, the success of ongoing initiatives and our ability to execute in an ever-changing environment. We expect to carry this momentum through the upcoming quarters.”

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