01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
United Parcel Service, Inc. (UPS) reported strong performance in its 2010 10-K filing, demonstrating a robust recovery from the 2008-2009 economic downturn.
Total revenue reached $49.5 billiona, a significant increase driven by improvements in global economic conditions, industrial production, and retail sales. The company saw a substantial recovery in operating profit, which grew by 54.5% to $5.87 billion, with operating margins improving to 11.9%. This growth was supported by increased volume across all segments (U.S. Domestic Package, International Package, and Supply Chain & Freight), improved revenue per piece due to base rate increases and fuel surcharges, and successful cost containment initiatives.
The company also highlighted its integrated global network, leading-edge technology, and a broad portfolio of services as key competitive strengths. Looking ahead, UPS anticipates continued modest economic recovery in 2011, though it acknowledges ongoing concerns regarding the European sovereign debt crisis. The company remains focused on leveraging its extensive network and technology to drive efficiency, expand its service offerings, and deliver value to its shareholders, as evidenced by an 11%b increase in its quarterly dividend declaration.
02—Key points
Key Highlights
- Total revenue increased by 9.4% to $49.5 billion in 2010, reflecting a strong economic recovery.
- Operating profit saw a significant increase of 54.5% to $5.87 billion, with operating margins improving to 11.9% from 8.4% in 2009.
- Average daily package volume grew by 3.4% to 15.6 million pieces worldwide, indicating increased demand.
- The International Package segment experienced strong growth, with revenue up 14.8%, driven by robust performance in Asia and Europe.
- Capital expenditures were managed efficiently, with a total of $1.39 billion invested in property, plant, and equipment, down from the prior year but focused on essential infrastructure and fleet modernization.
- The company declared an 11% increase in its quarterly dividend, signaling confidence in its financial health and commitment to shareholder returns.
- Despite economic recovery, UPS continues to face risks including general economic conditions, significant competition, regulatory changes, and potential labor disruptions.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $49.55B$45.30B | +9.4% |
| Operating Expenses | $43.90B$41.79B | +5.1% |
| Operating Income | $5.64B$3.51B | +60.8% |
| Interest Expense | $354.00M$445.00M | −20.4% |
| Net Income | $3.34B$1.97B | +69.6% |
| EPS (Basic) | $3.36$1.97 | +70.6% |
| EPS (Diluted) | $3.33$1.96 | +69.9% |
| Shares Outstanding (Basic) | 994.00M998.00M | −0.4% |
| Shares Outstanding (Diluted) | 1.00B1.00B | −0.1% |
05—Questions
Frequently Asked Questions
What was UPS's financial performance in 2010 compared to 2009?
UPS demonstrated a strong recovery in 2010. Total revenue increased by 9.4% to $49.5 billion, and operating profit more than doubled, rising 54.5% to $5.87 billion. This was driven by a 3.4% increase in average daily package volume and an improvement in revenue per piece, supported by cost-containment initiatives and network efficiencies.
Which segments of UPS performed best in 2010?
All three segments – U.S. Domestic Package, International Package, and Supply Chain & Freight – saw positive impacts from the economic recovery. The International Package segment was particularly strong, with revenue up 14.8%, benefiting from growth in Asia and Europe. The U.S. Domestic Package segment also showed significant improvement in operating profit, up 57.8%.
What are the main risks identified by UPS for its future operations?
UPS identifies several key risks, including adverse effects from general economic conditions in the U.S. and internationally, intense competition, complex and stringent government regulations, increased security requirements, potential labor strikes or work stoppages, fluctuating energy prices, foreign currency and interest rate changes, and damage to brand image and corporate reputation. The company also notes the potential impact of global climate change legislation.
How is UPS managing its capital resources and shareholder returns?
UPS generated strong operating cash flow, enabling it to fund capital expenditures and return value to shareholders. In 2010, capital expenditures were $1.39 billion, primarily for buildings, facilities, aircraft, vehicles, and technology. The company also repurchased shares under its authorized program and, notably, increased its quarterly dividend by 11% in February 2011, reflecting financial strength and a commitment to shareholder returns.
06—Continue