ATLANTA, Jan. 30, 2007 - Led by a strong performance in its international operations, UPS (NYSE: UPS) today reported net income of $1.13 billion and a 10% increase in diluted earnings per share to $1.04 for the fourth quarter ended Dec. 31, 2006.
For the full year of 2006, revenue rose almost 12%; operating profit increased 8%, and earnings per share climbed 11.2% to $3.86. The international business reached new heights, reporting more than $1.7 billion in operating profit. The company set a new record for package volume in 2006, delivering almost 4 billion packages or an average of 15.6 million per day.
"UPS had a very good year in 2006," said Chairman and CEO Mike Eskew. "We posted new highs in revenue, operating profit and earnings per share. We finished the year with a well-executed peak season, and strong execution will continue to be critical for us as we move forward in 2007."
Consolidated Results
4Q 2006 4Q 2005
Revenue $12.6 B $12.0 B
Operating profit $1.8 B $1.7 B
Operating margin 14.3% 14.3%
Average volume per day 17.3 M 16.8 M
Diluted earnings per share $1.04 $0.95
The fourth quarter produced solid earnings growth despite a slowing
Cash Position
UPS ended 2006 with nearly $2 billion in cash and marketable securities. For the year, it also:
- Generated cash from operations of $5.7 billion.
- Purchased 32.6 million shares, reducing total shares outstanding by 2.5%.
- Paid $1.6 billion in dividends.
- Invested $3.1 billion in capital expenditures.
4Q 2006 4Q 2005
Revenue $8.13 B $7.82 B
Operating profit $1.30 B $1.24 B
Operating margin 15.9% 15.8%
Average volume per day 15.4 M 14.9 M
Ground volume posted a healthy 3.6% increase in the quarter. Next Day Air volume declined marginally and deferred volume was flat against strong prior-year results. The company did an excellent job of executing on its holiday peak season plan, with deliveries exceeding 22 million on two days. Package delivery volume exceeded 20 million a day on seven days during the 2006 peak compared to five days the prior year.
International Package
4Q 2006 4Q 2005
Revenue $2.44 B $2.22 B
Operating profit $514 M $431 M
Operating margin 21.0% 19.4%
Average volume per day 2.0 M 1.8 M
Total international export volume grew 11.3%. Non-U.S. domestic package volume posted solid 4% growth as the company overlapped the effect of an acquisition.
During the quarter, UPS announced the expansion of its international shipping portfolio by providing three time-definite delivery options each day to the world's 30 largest markets, up from one or two daily options. These new delivery services make UPS's international delivery portfolio the most expansive in the industry and cover more than 80% of the world's GDP.
Supply Chain and Freight
4Q 2006 4Q 2005
Revenue $2.06 B $1.91 B
Operating profit (loss) $(1) M $43 M
Operating margin 2.3%
The Supply Chain and Freight segment improved from the third quarter, reflecting the positive impact of cost control measures taken in the fourth quarter. UPS Freight's performance was impacted by the general softening in the Less-Than-Truckload (LTL) environment.
Outlook
"We anticipate another good year in our global small package business despite a slowing
"We're encouraged by the opportunities we see for our company around the globe,"
UPS, which celebrates its 100th anniversary in 2007, is the world's largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in
EDITOR'S NOTE: UPS Chairman and CEO Mike Eskew and Vice Chairman and CFO Scott Davis will discuss fourth quarter and 2006 results with investors and analysts during a conference call at
Except for historical information contained herein, the statements made in this release constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of UPS and its management regarding the company's strategic directions, prospects and future results, involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, governmental regulations, our competitive environment, strikes, work stoppages and slowdowns, increases in aviation and motor fuel prices, cyclical and seasonal fluctuations in our operating results, and other risks discussed in the company's Form 10-K and other filings with the Securities and Exchange Commission, which discussions are incorporated herein by reference.
