United Parcel Service, Inc. (UPS) Posts Flat Earnings; Stock Falls

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United Parcel Service, Inc. (UPS) Posts Flat Earnings; Stock Falls
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United Parcel Service, the largest package delivery company worldwide reported flat earnings for the fourth quarter of 2014. As a result, UPS shares were trading lower at $99.74 per share (down 0.39%) at the time of this writing, around 11:26 A.M. in New York.

UPS fourth quarter financial results

During the fourth quarter, UPS generated adjusted earnings of $1.25 per diluted share, in line with guidance. The company said its diluted earnings were $0.49 per share on a GAAP basis, down from $1.25 per share in the same period in 2013.

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UPS reported $15.89 million in total revenue including $10 billion from U.S domestic package, $3.4 billion from international package, and $2.5 billion from supply chain and freight.

The company said it delivered 1.3 billion packages during the period, up by 8.1% from the same period in the previous year. UPS said its total revenue per package declined 0.8%. Its UPS SurePost product gained 28% during the quarter.

UPS said its adjusted operating profit declined 5.3% to $1.1 billion during the quarter while its operating expense increased more than $200 million due to higher-than-expected peak related costs. During the peak season, the company hired 100,000 temporary workers.

UPS to take necessary actions to improve profit

UPS CEO David Abney said customers were happy because the company delivered high-quality service during the holiday season, but its financial results were lower-than-expected.

Abney added that UPS will address the” disparity with both cost and revenue actions” going forward this year. Furthermore, he said, “We will take actions necessary to improve profitability by increasing operational efficiency and adjusting price where appropriate. Our growth strategy is sound and we reaffirm our long-term target of 9%-to-13% earnings per share growth.”

UPS ended the year 2014 with $3.4 billion in free cash flow. The company paid $2.4 billion in dividends and repurchased 26 million shares worth approximately $2.7 billion last year.

UPS business outlook

UPS CFO Kurt Kuehn said the company will continue its improvement and advances in strategic initiatives such as e-commerce growth, emerging markets expansion, operations technology implementation this year.

Kuehn said UPS expects all of its business units to grow in 2015. The management is estimated a 6% to 12% improvement in diluted earnings at around $5.05 to $5.30 per share for the full-year 2015.

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