United Parcel Service, Inc.
CEO : Ms. Carol B. Tome
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | -2.7% YoY | 9.3% | 12.5% | 2023-01-31 |
Brian Newman says,
Q4 2022 Results
- Consolidated revenue was $27 billion, down 2.7% from the fourth quarter of last year.
- Operating profit was $3.8 billion, a decrease of 3.3% compared to the fourth quarter of last year.
- Diluted earnings per share was $3.62, up 0.8% from the same period last year.
- U.S. domestic generated revenue of $18.3 billion, up 3.1%.
- International revenue was $5 billion, down 8.3% from last year.
U.S. Domestic Segment
- Average daily volume was down 3.8% versus the same time period last year, with about half of the decrease coming from the largest customer.
- Volume in October and November came in as expected, but in December, volume fell short, reflecting consumer spending cutbacks.
- B2C average daily volume declined 3% in the fourth quarter compared to last year.
- B2B average daily volume in the fourth quarter was down 5.2% year-over-year, driven by declines in retail and industry sectors that are sensitive to rising interest rates.
- SMBs made up 26.5% of the total U.S. domestic volume in the fourth quarter, an increase of 70 basis points from one year ago.
International Segment
- International average daily volume was down 8.6%. The decline was primarily driven by a 12.9% decrease in domestic average daily volume and weakness out of Asia due to COVID.
- Total export average daily volume in the fourth quarter declined 4% on a year-over-year basis.
- Asia export average daily volume declined 10.3% driven by lower global demand and disruptions to manufacturing output from the changes in China’s COVID policy.
Supply Chain Solutions Segment
- Revenue was $3.8 billion, down $846 million year-over-year.
- Forwarding, software global demand drove down volume and market rates more than expected, resulting in lower revenue and operating profit.
- Logistics partially offset the declines in forwarding and delivered double digit revenue and operating profit growth driven by gains in our complex healthcare business.
Outlook for 2023
- Expect 2023 to be a bumpy year due to rising interest rates, decades high inflation, recession forecasts, a war in Eastern Europe, COVID disruptions in China, and U.S. labor negotiations.
- Anticipate a mild recession in the first half of the year in the U.S., with a moderate recovery in the second half of the year.
- Expect low-single digit revenue growth rate in the U.S. domestic segment.
- Anticipate low-single digit decline in international average daily volume.
Carol Tome says,
Volume Decline and Macro Conditions
- UPS expected volume levels to decline from last year and they did, but more than planned due to macro conditions.
- Consolidated revenue was $27 billion, down 2.7% from last year and operating profit was $3.8 billion, a decrease of 3.3%.
Customer First, DAP, and Deal Manager
- Customer first is about creating a frictionless customer experience targeted at certain customer segments including SMBs and healthcare.
- In 2022, they generated more than $2.3 billion in DAP revenue exceeding targets and expect to generate around $3 billion in global DAP revenue in 2023.
- In 2022, they launched Deal Manager and saw a 22 percentage points higher win rate in the U.S. than the baseline. They plan to expand access to Deal Manager to more than 40 countries in 2023.
Healthcare and Net Promoter Score
- In 2022, their healthcare portfolio reached $9.2 billion in revenue and their goal is to become the number one complex healthcare logistics provider in the world.
- The improvements they saw in their net promoter score outpaced the competition in 2022. They made strong gains and all 16-customer journeys, including the three most important.
- They are well on their way to their NPS target of 50.
Innovation-Driven and Environmental Sustainability
- In 2022, they delivered industry-leading service for the fifth consecutive year by leveraging the agility and efficiency of their integrated network, and their engineers and operating teams quickly made decisions to adjust the network and keep service levels high.
- They supplemented their engineering tools with their total service plan in 2022, which further improved their on-time network and drove productivity.
- In 2022, they created a new growth platform called logistics-as-a-service, which combines digital capabilities with their best-in-class global integrated network.
- In 2022, they took delivery of over 2,300 alternative fuel and advanced technology vehicle, and in 2023, they plan to add more than 2,400 vehicles as they move toward carbon neutrality by 2050.
- In 2022, they delivered a return on invested capital of 31.3%, 50 basis points above 2021.
2023 Outlook and Dividend Increase
- UPS is planning conservatively and pivoting quickly in 2023.
- They are balancing defensive and offensive mode and executing their wildly important initiatives.
- They are increasing their 2023 expense and capital budget by over $900 million.
- The UPS board has approved a $0.10 increase in the quarterly dividend from $1.52 per share to $1.62 per share. This is the 14th consecutive year they have increased the UPS dividend.
Q & A sessions,
Teamsters Negotiations
- UPS and the Teamsters have a win-win approach to the contract negotiations.
- Both parties agree that a healthy and growing UPS is good for all stakeholders.
- The issue of working six days a week is a shared concern, and they are working towards resolving it.
- UPS is revamping its safety program to address the heat concerns for its employees.
- UPS is committed to delivering a win-win contract before the end of July.
Customer Experience Investments
- UPS is investing in improving the customer experience, which is crucial to retaining customers.
- There have been significant improvements in negotiating value, rerouting packages, and resolving a claim.
- The company is leaning into the experience and continuing to make improvements.
Investments and Guidance
- UPS is investing in smart pack smart facility, healthcare, and DAP to drive productivity and growth.
- The company is calling for low single-digit CPP in 2023.
- UPS is managing down its Amazon business and factoring it into its guidance.
- The international markets, particularly Asia, are facing challenges but are expected to rebound in the second half of the year.
No bad stock 