UPS POSTS STRONG EARNINGS GAIN ON GROWTH ACROSS ALL SEGMENTS
International, Non-Package Surge; U.S. Segment Strengthens
ATLANTA, Oct. 21, 2003 - UPS (NYSE:UPS) today reported a 28%
jump
in net income for the third quarter thanks to a strengthening U.S.
package
business, record performances by both the international and non-package
segments and two other modest gains.
Earnings per diluted share increased 27% to $0.65 from $0.51
last
year, including gains due to the sale of a business unit and a favorable
tax
ruling. Without these items, earnings per diluted share were $0.62, up
22%
compared to the prior year.
The U.S. package business, paced by a strong 10.2% rise in Next
Day
Air(r) volume and a 2% increase in the larger ground business, grew 3.2%
or
374,000 packages per day compared to the prior-year period.
International
export package volume climbed 8.1% as that unit posted the most
profitable
quarter in its history. Non-package revenue increased 6.2% and
operating
profit for that unit jumped 92%, including a gain on the sale of UPS
Aviation Technologies.
"While there were many highlights in the quarter, the
accelerated
growth in U.S. package deliveries, increasing signs of U.S. economic
growth
and the strong international performance really stand out," said Scott
Davis, UPS`s chief financial officer. "We also were pleased with the
continuing improvement on the non-package side, because we know the
strategy
of expanding our distribution and supply chain capabilities will feed
the
success of all parts of our business going forward."
For the quarter ended Sept. 30, 2003, consolidated revenue
totaled
$8.31 billion, up 7.2% from the $7.75 billion reported during the same
period in 2002. Consolidated operating profit increased 21% to $1.15
billion. Net income totaled $739 million, an increase of 28% over the
prior
year`s $578 million. Excluding the gains due to the sale of the
business
unit and a favorable tax ruling, net income totaled $702 million, an
increase of 21%.
Highlights by segment included:
-- U.S. package revenue totaled $6.22 billion, up 5.6% compared
to
the prior year`s $5.89 billion. Operating profit increased 2%, to $825
million, despite continuing pressure from rising healthcare expenses and
other benefit costs. Total daily volume in the United States rose 3.2%
to
12 million packages per day, including a 10.2% gain in Next Day Air
package
volume and a strong 8.5% increase in deferred air volume. Ground volume
increased 2% to 10 million packages per day.
-- International package revenue rose 15.7% to $1.37 billion,
while
operating profit surged 171% from $65 million in 2002 to $176 million
this
year. That made the quarter the most profitable in the unit`s history,
even
though the third quarter normally lags with the summer vacation period.
Operating margin for the segment was 12.8%, the fourth consecutive
quarter
with international operating margins over 10%. Total volume rose 3.8%
to
1.23 million packages per day, with average export volume increasing
8.1% to
468,000 packages per day. The Asia-Pacific region posted another strong
export gain of 14%. U.S. export volume rose 6.5%, the largest such
increase
since 2000.
-- The non-package segment saw revenue climb 6.2% to $723
million
and operating profit increase 92% to $146 million, including the $24
million
gain on the sale of UPS Aviation Technologies. The improvement in
operating
profit was driven not only by revenue growth and new customer contracts,
but
also by the successful integration of acquisitions into UPS Supply Chain
Solutions. UPS Supply Chain Solutions was rated the No. 1 logistics
provider by Inbound Logistics earlier this month.
The quarter also included the benefit of an income tax reduction
of
$22 million based on a federal court ruling regarding the expensing of
aircraft maintenance costs.
For the nine months ended Sept. 30, 2003, consolidated revenue
increased 6.7% to $24.55 billion, while operating profit rose 8.4% to
$3.17
billion. Net income climbed 21.5%, from $1.68 billion to $2.04 billion.
Diluted earnings per share increased 21.6% to $1.80.
Davis said the company is encouraged by the momentum in its U.S.
business. This is being driven by signs of economic recovery, expanded
customer relationships, the deployment of new technology and improved
customer access through The UPS Store network.
"In light of our momentum and the firming U.S. economy, we
believe
UPS is going to have a strong fourth quarter," Davis predicted. "We
expect
to see additional improvement in our U.S. domestic segment with volume
growth of 3% to 4%. We anticipate the international and non-package
segments will continue the solid growth trends we saw in the third
quarter."
Davis said the company expects fourth quarter earnings to be in
the
range
of $0.65 to $0.70 per diluted share compared to the $0.59 recorded
during
the period last year. The company expects to fully achieve its targeted
earnings growth of 10-to-15% for the full year, he added.
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.
# # #
Detailed financial schedules are available on the company`s Web
site.
Except for historical information contained herein, the statements made
in
this release constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities
Exchange Act of 1934. Such forward-looking statements, including
statements
regarding the intent, belief or current expectations of UPS and its
management regarding the company`s strategic directions, prospects and
future results, involve certain risks and uncertainties. Certain
factors
may cause actual results to differ materially from those contained in
the
forward-looking statements, including economic and other conditions in
the
markets in which we operate, governmental regulations, our competitive
environment, strikes, work stoppages and slowdowns, increases in
aviation
and motor fuel prices, cyclical and seasonal fluctuations in our
operating
results, and other risks discussed in the company`s Form 10-K and other
filings with the Securities and Exchange Commission, which discussions
are
incorporated herein by reference.
Contacts:
Norman Black
Public Relations
404-828-7593
Kurt Kuehn
Investor Relations
404-828-6977
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