UPS Earnings Top Street Forecasts On Margin Focus, Revenues Miss; New $5 Billion Share Buyback Unveiled
UPS topped Street forecasts for its fourth quarter earnings, but a slump in international deliveries kept revenue gain in check.
UPS topped Street forecasts for its fourth quarter earnings, but a slump in international deliveries kept revenue gain in check.
United Parcel Service (UPS) - Get Free Report posted stronger-than-expected fourth quarter earnings Tuesday, thanks to a focus on higher-margin packages, but missed Street revenue forecasts as international deliveries slumped.
UPS said earnings for the three months ending in December were pegged at $3.96 per share, up from a loss of 90 cents per share over the same period last year and firmly ahead of the Street consensus forecast of $3.59 per share. Group revenues, the company said, fell 2.8% to $27 billion, just shy of analysts' estimates of a $28.08 billion tally.
Domestic segment revenues rose 3.1% to $18.25 billion, UPS said, powered in part by a 7.2% boost in revenue-per-piece, a key industry metric. International revenues, meanwhile, were down 8.3% to $4.95 billion while supply chain solutions sales fell 16% to $3.83 billion.
Looking into the 2023 financial year, UPS said it sees revenues in the region of $97 billion to $99.4 billion, with margins in the region of 12.8% to 13.6%. he group also said dividend payments would be around $5.4 billion with buyback pegged at $3 billion.
“I want to thank all UPSers for delivering what matters throughout the holiday season, including industry-leading service to our customers for the fifth consecutive year,” said CEO Carol Tomé. “For the year, we reached our targeted consolidated operating margin and return on invested capital goals one year earlier than originally anticipated. Our results in 2022 demonstrate our strategy is working.”
UPS shares were marked 0.55% lower in pre-market trading immediately following the earnings release to indicating an opening bell price of $176.97 each.
The group also declared a quarterly dividend of $1.62 per share, and authorized a new $5 billion share buyback plan.
Last last month, smaller rival FedEx Corp. (FDX) - Get Free Report unveiled stronger-than-expected second quarter earnings and outlined deeper cost-cuts heading into the coming year.
FedEx said it would add another $1 billion in cost savings to its already-established $2.7 billion program, as it reduces FedEx Express flights and parks as many as eight planes. It also cut back on Sunday deliveries and closed some domestic sorting warehouses.
For the three months ending in November, FedEx said earnings came in at $3.07 per share, well ahead of Street forecasts, Revenues were light, however, at $22.8 million down 2.9% from last year.
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