Strong growth at UPS

According to a trading statement from UPS, it made an operating profit of $7.5bn in 2017, up 38% on 2016. Revenue was up 8.2% to $65.9bn.

“We achieved our 2017 adjusted earnings-per-share target through exceptionally strong revenue and yield growth, coupled with benefits from our network investments and portfolio initiatives,” said chairman and chief executive David Abney.

“We made significant progress on key capacity investments in 2017. Our momentum, transformative actions and the economic catalyst from the Tax Cuts and Jobs Act (TCJA), position UPS for growth in 2018 and beyond. We expect to unlock significant resources, which will be available for accelerated investments in our network and create additional opportunities for our people.”

In Q4, UPS operating profit was $1.5bn by comparison to a loss of $428 million in Q4 of 2016. For the quarter, revenue was up from $16.9bn to $18.8bn.

Thanks in part due to e-commerce,UPS international parcels was the star performer with an operating profit growing from $281 million to $725 million in Q4.

The US domestic business moved back into profit in the fourth quarter turning a $570m operating loss into a $627m operating profit. “Revenue per piece increased 2.9 per cent, as higher base-rate pricing and fuel surcharges offset headwinds from customer and product mix. Shipments surged beyond network capacity during Cyber-periods driving additional operating cost of $125 million,” UPS said.

Freight forwarding and supply chain also performed reasonably well. From a loss of $139 million in Q4 2016 it saw a growth to $142 million in profit in the same period of 2017.

Looking ahead, chief financial officer Richard Peretz said: “Our growth opportunities are accelerating. The strong economic outlook and UPS’s high return on invested capital generates a unique opportunity to create additional long-term value by increasing capital investments. These investments enable UPS to execute our strategy and we are well-positioned for 2018 and beyond.”