It should come as no surprise to anyone that UPS’ Fourth Quarter Earnings report was better than analysts expected.
As reported by Transport Topics, UPS on February 1st announced record fourth-quarter and full-year financial results, as online holiday shopping which boosted home parcel deliveries along with an increase in medical shipments, including delivery of hundreds of millions of COVID-19 vaccines obviously kept the company’s drivers, package handlers and trucks busy.
Fourth Quarter revenues rose 11.5% to $27.8 billion compared with $24.9 billion in 2020, while net income came in at $3.09 billion or $3.53 cents per share, compared with a loss of $3.34 billion, negative $3.84, during Q4 2020. Year-ago results were affected by $5.6 billion in charges related to the company’s pension plan as well as after-tax impairment charges related to its sale of UPS Freight. Wall Street analysts had expected Q4 EPS of $3.10 on revenue of $27.1 billion.
For the full year, Atlanta-based UPS said revenue increased 15% to nearly $97.3 billion compared with $84.6 billion in 2020, while net income was $12.9 billion compared with $1.4 billion in 2020.
Lifted by its strong results, UPS announced a 48% increase in its quarterly dividend, to $1.52 per share, payable on March 10, 2022 to shareholders of record as of February 22, 2022.
“I want to thank all UPSers for their outstanding efforts throughout the holiday season and for once again delivering industry-leading service to our customers,” CEO Carol Tomé said in a news release. “The execution of our strategy is delivering positive financial results and driving strong momentum as we move into 2022.”
In mid-December, 2021, UPS announced it had delivered more than 1 billion COVID-19 vaccines to health care customers and global organizations around the world. UPS is one of several freight companies that is active in COVID-19 distribution. Tomé said the company’s health care division continues to generate strong profitability and is lifting the company’s profile. Now 18 months into her leadership tenure, Tomé has prioritized more profitable deliveries and contracts over boosting volume, as the company has pursued more contracts with health care companies and medium- to large-sized businesses.
Based on this relatively new company philosophy, we wonder how small to midsize UPS shippers will be treated as they try to stop out-of-control shipping costs that have plagued these shippers for the past few years.
However, shipments by one key, large customer — Amazon.com Inc.— declined 1.6% compared with 2020. Amazon represented 11.7% of UPS’ business in 2021, compared with 13.3% a year ago. We certainly expect this trend to continue and perhaps move at an even faster pace in 2022 and beyond. On a February, 1 conference call with analysts and reporters, Tomé said Amazon and UPS have a strong relationship, even as Amazon continues to build its own delivery network. “We have mutually agreed about the volume that we should take and the volume that they should keep that works best for both companies,” she said.
During the fourth quarter of 2021, UPS’ average daily shipping volume fell 0.6%, driven by a 4.8% drop in international shipments that was offset by a fractional uptick in domestic package volume.
When the numbers are broken down by operating divisions, fourth quarter revenue in UPS’ domestic unit rose 12.4% to $17.7 billion compared with $15.7 billion a year ago. The increase was led in part by the strong holiday shopping season as well as a 10.5% increase in revenue per piece.
The company’s international segment reported a 13.1% gain in Q4 revenue to $5.39 billion compared with $4.77 billion in 2020. International revenue per piece increased 16.4%, UPS said.
And remember, UPS has for the past several years not only increased their base rates by approximately 6% per year, but they have also instituted a number of additional surcharges that have obviously had a very positive effect on their financial results. Parcel shippers can expect more of the same in the years to come.
to receive our FREE white papers: