UPS Q1 Earnings Review: Revenue, Operating Profits Increase, EPS Beats Expectations

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UPS: United Parcel Service logo
UPS
United Parcel Service

UPS (NYSE:UPS) announced its Q1 earnings on Thursday, April 28th. The company’s revenue grew by 3.2% year-on-year (y-o-y) to $14.4 billion for the quarter. The rise in revenue was primarily driven by an increase in package volumes, partially offset by lower fuel surcharges and unfavorable currency exchange effects. The company’s operating profits increased by 9% y-o-y to $1.9 billion, aided by a substantial decrease in the cost of fuel. The company’s earnings increased 12.4% over the prior year quarter to $1.27 per share against market expectations of $1.22. Buoyed by the increase in earnings, UPS increased its EPS guidance for full year 2016 from $5.70 to $5.90.

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Segment Performance

The U.S. Domestic Package segment, which has traditionally been the major revenue driver for the company, reported revenues of $9 billion in the first quarter.

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Despite a decline in revenue compared to Q1 2015, the International Package segment’s operating profits grew by more than 15% in 2016. This was primarily driven by lower operating expenses and better operational efficiencies in the quarter.

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Investments & Free Cash Flow 

The company increased its capital expenditure from $365 million in Q1 2015 to $427 million in Q1 2016, an increase of 17% y-o-y This, coupled with a substantial rise in other investing activities, led to a decline of 8% in the company’s free cash flow.

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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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