Key Takeaways From UPS’ Earnings

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UPS: United Parcel Service logo
UPS
United Parcel Service

UPS (NYSE:UPS) announced its Q2 earnings on Friday, July 29th. The company’s revenue grew by 3.8% on a year-on-year basis to $14.6 billion for the quarter. The rise in revenue was driven by an increase in package volumes, partially offset by changes in fuel surcharges and unfavorable FX rates. The company’s operating profits increased 4% y-o-y to $2.04 billion for the quarter. This was driven by successful implementation of the company’s ORION program, which was aimed at improving driver routes and reducing fuel costs. The company’s net earnings increased 6% on a y-o-y basis to $1.43 per share, in line with market expectations. In view of its performance in the first two quarters, the company reaffirmed its full year earnings guidance of $5.70 to $5.90 per share.

UPS Earnings

Segment Performance

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The U.S. Domestic Package segment, which has traditionally been the company’s primary source of revenue, reported revenues of $9 billion for the quarter, an increase of 2.5% on a y-o-y basis.  The growth was driven by a marginal increase in the segment’s average daily package volume.

DOmestic

Despite the slowdown in global markets, the company’s International Segment also saw a marginal increase in revenues to $3.1 billion for the quarter. The total operating profit increased 11.1% over the prior year quarter to $613 million, primarily driven by reduced cost of fuel and better operational efficiency due to the company’s ORION program.

International

 

Investments & Free Cash Flow

The company’s free cash flow increased 13% on a y-o-y basis to $3.67 billion, largely driven by an 11% increase in net cash from operations as well as a 38% increase in income from the disposal of property, plan and equipment (PP&E).

Cash

 


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