July 24, 2012
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, January 30, 2007
2006 Earnings Climb 11.2%; International Profits Exceed $1.7 Billion
Led by a strong performance in its international operations, UPS (NYSE: UPS) today reported net income of $1.13 billion and a 10% increase in diluted earnings per share to $1.04 for the fourth quarter ended Dec. 31, 2006.
For the full year of 2006, revenue rose almost 12%; operating profit increased 8%, and earnings per share climbed 11.2% to $3.86. The international business reached new heights, reporting more than $1.7 billion in operating profit. The company set a new record for package volume in 2006, delivering almost 4 billion packages or an average of 15.6 million per day.
"UPS had a very good year in 2006," said Chairman and CEO Mike Eskew. "We posted new highs in revenue, operating profit and earnings per share. We finished the year with a well-executed peak season, and strong execution will continue to be critical for us as we move forward in 2007."
| Consolidated Results |
4Q 2006
|
4Q 2005
|
| Revenue |
$12.6 B
|
$12.0 B
|
| Operating profit |
$1.8 B
|
$1.7 B
|
| Operating margin |
14.3%
|
14.3%
|
| Average volume per day |
17.3 M
|
16.8 M
|
| Diluted earnings per share |
$1.04
|
$0.95
|
The fourth quarter produced solid earnings growth despite a slowing U.S. economy. Consolidated average daily package volume rose 3.3%, or 558,000 additional packages each day. Pricing remained firm around the globe. Consolidated average revenue per piece increased 2%.
Cash Position
UPS ended 2006 with nearly $2 billion in cash and marketable securities. For the year, it also:
| U.S. Package |
4Q 2006
|
4Q 2005
|
| Revenue |
$8.13 B
|
$7.82 B
|
| Operating profit |
$1.30 B
|
$1.24 B
|
| Operating margin |
15.9%
|
15.8%
|
| Average volume per day |
15.4 M
|
14.9 M
|
Ground volume posted a healthy 3.6% increase in the quarter. Next Day Air¿ volume declined marginally and deferred volume was flat against strong prior-year results.
The company did an excellent job of executing on its holiday peak season plan, with deliveries exceeding 22 million on two days. Package delivery volume exceeded 20 million a day on seven days during the 2006 peak compared to five days the prior year.
| International Package |
4Q 2006
|
4Q 2005
|
| Revenue |
$2.44 B
|
$2.22 B
|
| Operating profit |
$514 M
|
$431 M
|
| Operating margin |
21.0%
|
19.4%
|
| Average volume per day |
2.0 M
|
1.8 M
|
Total international export volume grew 11.3%. Non-U.S. domestic package volume posted solid 4% growth as the company overlapped the effect of an acquisition.
During the quarter, UPS announced the expansion of its international shipping portfolio by providing three time-definite delivery options each day to the world's 30 largest markets, up from one or two daily options. These new delivery services make UPS's international delivery portfolio the most expansive in the industry and cover more than 80% of the world's GDP.
| Supply Chain and Freight |
4Q 2006
|
4Q 2005
|
| Revenue |
$2.06 B
|
$1.91 B
|
| Operating profit (loss) |
$(1) M
|
$43 M
|
| Operating margin |
¿
|
2.3%
|
The Supply Chain and Freight segment improved from the third quarter, reflecting the positive impact of cost control measures taken in the fourth quarter. UPS Freight's performance was impacted by the general softening in the Less-Than-Truckload (LTL) environment.
Outlook
"We anticipate another good year in our global small package business despite a slowing U.S. economy," said Scott Davis, UPS's vice chairman and chief financial officer. "We also expect our Supply Chain and Freight segment to gain momentum as the year progresses."
Davis said he anticipates diluted earnings per share for the full year 2007 to increase 6-to-10%, or within a range of $4.10 to $4.25, compared to the $3.86 reported in 2006. For the first quarter of 2007, UPS is projecting diluted earnings per share in the range of $0.94 to $0.98 compared to the $0.89 reported in the prior-year period.
"We're encouraged by the opportunities we see for our company around the globe," Davis added. "We're operating a healthy business in a vital industry, and we believe our long-term strategy of providing supply chain solutions to our customers is right on target."
View the full financial tables
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EDITOR'S NOTE: UPS Chairman and CEO Mike Eskew and Vice Chairman and CFO Scott Davis will discuss fourth quarter and 2006 results with investors and analysts during a conference call at 8:30 a.m. EST today. That call is open to listeners through a live Webcast. To access the call, go to www.shareholder.com/UPS and click on "Earnings Webcast."
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