Sharp fall strikes UPS’ fourth quarter


United Parcel Service (UPS) has reported that its financial results were below expectations for the fourth quarter of 2014, due to a higher than expected peak related expenses in its US domestic business.

The company earned $453 million, or 49 cents per share, in the last three months of 2014, compared with $1.1 billion, or $1.25 per share, a year earlier.

“As we move into 2015, we will address this disparity with both cost and revenue actions,” UPS’ chief executive officer, David Abney, says. “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 nine to 13 per cent earnings per share growth.”

UPS delivered 1.3 billion packages during  the quarter, an increase of 8.1 per cent over the same period last year. In 2014, it completed delivery of 4.6 billion packages, up 6.8 per cent over 2013. 

Revenue in the supply chain and freight segment increased 7.4 per cent to $2.5 billion, driven by growth in distribution and UPS Freight. The adjusted operating profit increased 4.7 per cent to $179 million as improvements were offset by declines in the forwarding unit.

Operating profit for forwarding was lower, as results in North American airfreight and ocean were offset by challenges in international air cargo. UPS Freight experienced revenue growth of 8.6 per cent, primarily driven by less than truckload tonnage gains of 4.8 per cent and yield improvements.

Chief financial officer, Kurt Kuehn, says that 2015 will be one of improvement and advances in strategic initiatives that have great potential for the company, and adds: “The company expects growth across all business units.”


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