What to Expect from UPS Q1 Earnings

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UPS: United Parcel Service logo
UPS
United Parcel Service

UPS (NYSE:UPS) is set to announce its Q1 earnings on Thursday, April 28th. The year  of 2015 was a good one for UPS, rounded off with record EPS in Q4 and highest ever operating profit. For the fiscal year 2015, the revenue grew marginally to $58.4 billion while the EPS was $5.43, an increase of 14% from the previous year and an all time high.

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Revenue Growth

For its first quarter results, UPS expects revenues to grow in mid single digits. The U.S. Domestic Package segment, which is the primary source of revenue for the company, is expected to see volumes grow by 2-4% for the year. E-commerce will be the major driver, as it saw 14% growth in 2015 and will likely see a similar increase this year.

The company expects its revenues from International packages to increase by 2-4%, driven by an increase in volumes partially offset by foreign currency fluctuations. The strategic investments made by the company in Europe and Asia over the past few years will also help. During the last year, UPS has taken network improvement measures to improve its efficiency in the international markets, leading to an improvement in its bottom line. The company is expected to carry on with the same measures this year as well.

The Supply Chain & Freight segment is also expected to grow during the year, both organically and inorganically.  The acquisition of Coyote logistics and its subsequent integration in the business line can lead to revenue growth of 15-20%.

Operating Profits

The company expects operating profits to grow by 6-10% y-o-y in 2016 driven by an increase in daily shipments and lower fuel costs. Fuel costs, contributing about 5% of the company’s operating expenses, are likely to decline due to lower fuel prices and better operational efficiencies.

Have more questions about UPS (NYSE:UPS)? See the links below:

>> What is UPS’ Current Revenue & EBITDA Breakdown?

>> What’s UPS’s Fundamental Value Based on 2015 Results?

>> By How Much Can UPS’s Revenue & EBITDA Grow In The Next 5 Years: Trefis Estimate

>> What contributed to UPS’s topline growth in 2015?

>> Where is UPS’s 2016 Revenue Growth Expected To Come From?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com.
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our Complete Analysis of UPS

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