UPS has high hopes for 2018 following a strong year in 2017

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UPS has high hopes for 2018 following a strong year where net income almost reached $5 billion, with strong growth in all business sectors.

Total revenue increased by 8.2 per cent to $65.8 billion, with US domestic packages up 6.4 per cent to $40.7 billion, international packages by eight per cent to $13.4 billion and supply chain & freight by 14.8 per cent to $11.7 billion.

Net income rose from $3.4 billion in 2016 to $4.9 billion, with total operating profits increasing from $5.4 billion to $7.5 billion.

US domestic package operating profit increased from $3 billion in 2016 to $4.3 billion, international packages were up from $2 billion to $2.4 billion, and supply chain & freight was up from $406 million to $785 million.

UPS chairman and chief executive officer, David Abney says: “We made significant progress on key capacity investments in 2017.  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.”

Chief financial officer, Richard Peretz adds: “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”

UPS has also announced that it will invest more than $12 billion to expand the company’s Smart Logistics Network, significantly increase pension funding and position the company to further enhance shareowner value.

It plans to raise future capital spending above its previously committed six to seven per cent of annual revenue, and will invest an additional $7 billion over three years for the construction and renovation of facilities, to acquire new aircraft and ground fleet vehicles, and to enhance the information technology platforms required to support the network, manage the business and power new customer solutions.

Abney says: “This $12 billion investment program is an outgrowth of the opportunity for tax savings created by the Tax and Jobs Act.

“We will increase network investments and accelerate pension funding to strengthen the company for the long term, so that we maximise the benefit to our global customers, employees and shareowners.”

UPS made a $5 billion tax qualified contribution to the company’s three UPS sponsored US pension plans, representing about $13,000 per participant.

The contribution raised the funding level to above 90 per cent, securing retirement benefits on behalf of union represented and union free employees eligible for UPS funded pensions.