UPS earnings surge 30.1% in 2017

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UPS earnings surged 30.1 percent year-over-year to $4.9 billion in 2017.

   UPS Inc. saw its full year net income surge 30.1 percent to $4.9 billion in 2017, according to the company’s most recent financial statements.
   The Atlanta-based parcel giant and third-party logistics provider posted diluted earnings per share (EPS) of $5.61 per share for the year compared with $3.87 per share in 2016 as revenues jumped 8.2 percent year-over-year to $65.9 billion.
   UPS’s results were helped by a strong fourth quarter in which the company reported a profit of $1.1 billion compared with a loss of $239 million during the same quarter a year ago.
   The company reported EPS of $1.27 per share during the quarter, a sharp turnaround from a $0.27 per share loss in Q4 2016, on revenues that rose 11.2 percent to $18.8 billion.
   UPS’s Q4 2017 adjusted EPS of $1.67 per share beat consensus analyst expectations by $0.01 per share and revenues beat expectations by $640 million, according to investment analyst Seeking Alpha.
   “We achieved our 2017 adjusted earnings-per-share target through exceptionally strong revenue and yield growth, coupled with benefits from our network investments and portfolio initiatives,” David Abney, UPS chairman and CEO, said of the results.
   “We made significant progress on key capacity investments in 2017,” he added. “Our momentum, transformative actions and the economic catalyst from the Tax Cuts and Jobs Act (TCJA), position UPS for growth in 2018 and beyond. We expect to unlock significant resources, which will be available for accelerated investments in our network and create additional opportunities for our people.”
   The company’s U.S. Domestic Package segment reported fourth quarter operating profits of $627 million compared with a $570 million loss in Q4 2016, thanks in part to an 8.4 percent boost in revenues to $11.8 billion. UPS Ground volumes rose 5.7 percent in the fourth quarter, while Premium Next Day Air shipments ticked up 4.9 percent year-over-year.
   “However, bottom line results were muted by additional peak operating expenses due to cyber-period volume surges and short-term costs related to capacity projects yet to come on-line,” UPS said.
   Operating profits in the International Package unit skyrocketed 158 percent year-over-year to $725 million on revenues that grew 12.5 percent to $3.8 billion. The staggering growth can be attributed in large part to a decrease in impacts from mark-to-market pension charges.
   Daily export shipments for the segment grew 16 percent compared with fourth quarter 2016, with all regions contributing to the increase.
   “Our International segment has generated four consecutive quarters of double-digit export growth,” said Abney. “That execution, combined with our growth strategy and the investments we’ve made over the last three-and-a-half years, produced results that exceeded expectations.”
   In UPS’s Supply Chain and Freight Segment, Q4 2017 operating profits stood at $142 million, a record for the division, compared with a $139 million loss the previous year, as revenues jumped 20.8 percent year-over-year to $3.2 billion. The company attributed the record results to improved market conditions, revenue-quality improvements and structural cost-reduction programs.
   Looking ahead to this year, UPS said it expects 2018 adjusted diluted earnings per share to be in a range of $7.03 per share to $7.37 per share, including roughly $200 million in additional pre-tax pension expenses due to lower discount rates, as well as benefits from recently passed tax reform legislation in the United States that lowered the corporate tax rate from 35 percent to 21 percent.
   “Our growth opportunities are accelerating,” said UPS Chief Financial Officer Richard Peretz. “The strong economic outlook and UPS’s high return on invested capital generates a unique opportunity to create additional long-term value by increasing capital investments. These investments enable UPS to execute our strategy and we are well-positioned for 2018 and beyond.”

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