10-QPeriod: Q1 FY2012

UNITED PARCEL SERVICE INC Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 7, 2012For Securities:UPS

Summary

United Parcel Service (UPS) reported its first-quarter 2012 financial results, showcasing a 4.4% increase in revenue to $13.1 billion, driven primarily by growth in its U.S. Domestic Package segment. The company also saw a 6.0% rise in net income to $970 million, translating to diluted earnings per share of $1.00, up from $0.91 in the prior year. This performance was supported by a 4.3% increase in average daily package volume and a modest 0.9% rise in average revenue per piece. The company's strategic initiatives focused on improving yield management, increasing operational efficiency, and cost containment contributed to a 6.6% increase in operating profit. Despite mixed global economic conditions, particularly slower growth in Europe, UPS demonstrated resilience through its diversified product portfolio and flexible transportation network. The acquisition of Kiala S.A. in February 2012 was also noted as a step to broaden its e-commerce delivery service offerings in Europe.

Financial Highlights

52 data points
Beta

Revenue

$13.14B

Net Income

$970.00M

7.4% Net Margin

EPS (Diluted)

$1.00

Total Assets

$35.96B

Cash & Equivalents

$5.13B

Free Cash Flow

$1.85B

Financial Statements
Beta
Revenue$13.14B
Operating Expenses$11.57B
Operating Income$1.57B
Interest Expense$94.00M
Net Income$970.00M
EPS (Basic)$1.01
EPS (Diluted)$1.00
Shares Outstanding (Basic)962.00M
Shares Outstanding (Diluted)972.00M

Key Highlights

  • 1Revenue increased by 4.4% to $13.1 billion for the three months ended March 31, 2012.
  • 2Net income rose by 6.0% to $970 million, with diluted EPS reaching $1.00, up from $0.91 in the prior year.
  • 3U.S. Domestic Package segment showed strong performance with a 6.1% revenue increase and a 13.1% rise in operating profit.
  • 4Average daily package volume across all segments increased by 4.3%.
  • 5Operating profit grew by 6.6% to $1.57 billion, with operating margin improving slightly to 11.9%.
  • 6The company reported a significant increase in cash from operating activities, totaling $2.28 billion, up from $1.28 billion in the prior year.
  • 7UPS announced an agreement to acquire TNT Express N.V. for €5.16 billion, aiming to create a global logistics leader, with an anticipated closing in the third quarter of 2012.

Frequently Asked Questions

The primary driver for UPS's revenue growth was a solid increase in its U.S. Domestic Package segment, fueled by improved U.S. economic conditions, continued growth in retail e-commerce, and strong customer demand for lightweight products. Business-to-consumer shipments showed particularly strong growth.

Slower economic growth outside the U.S., especially in Europe, led customers to trade down from premium express products to standard delivery options. This volatility required UPS to adjust its air capacity and cost structure but was managed through its broad product portfolio and network flexibility.

The announced agreement to acquire TNT Express for €5.16 billion is a significant strategic move aimed at creating a global leader in the logistics industry. The combination is expected to enhance UPS's express capabilities and integrated global network, particularly in Europe, and deepen its presence in fast-growing regions like Asia-Pacific and Latin America.

Operating expenses increased by 4.1%, largely driven by higher fuel costs, which impacted fuel surcharges and purchased transportation. Compensation and benefits also rose due to contractual wage increases and changes in the timing of management incentive awards. Pension expense also contributed to the increase.