UPS Earns $2.7 Billion in Q2
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Robust e-commerce business and the company’s role in delivering millions of COVID-19 vaccines worldwide helped contribute to strong second-quarter financial results for Atlanta-based UPS Inc.
The company on July 27 reported Q2 net income of $2.67 billion, or $3.06 a share, compared with $1.78 billion, $2.04, last year. The results topped analysts’ EPS estimate of $2.82, according to Refinitiv data. Total Q2 revenue jumped 14.5% to $23.42 billion compared with $20.4 billion last year, beating estimates of $23.24 billion.
“I want to thank all UPSers for executing our strategy and delivering high service levels, which fueled record financial results in the second quarter,” CEO Carol Tomé said. “Through our better not bigger framework, we are moving our world forward by delivering what matters.”
Tomé
UPS is one of several freight companies playing a pivotal role in the COVID-19 vaccine rollout. Tomé said the company’s health care division continues to be a leader in profitability and lifting the company’s profile.
“We are continuing to deliver lifesaving COVID-19 vaccines, and our health care growth initiatives are gaining momentum,” she said. “Health care is one of our wildly important customer-first initiatives. In the second quarter, health care customer revenue on a global basis grew 19.8% and contributed to margin expansion in all three segments. To grow in the health care sector, we are creating new capabilities, like our recent launch of UPS Cold Chain Solutions, and we’re deploying sophisticated solutions that customers want into new geographies, like the expansion of UPS Premier to Canada and Europe. These actions are advancing our leadership position in the global health care logistics market.”
UPS also announced the closing of its $800 million, all-cash sale of its less-than-truckload UPS Freight division to Montreal-based TFI, which is rebranding the operation as TForce Freight.
“We completed the divestiture of UPS Freight, a capital-intensive, low returning part of our business. This, along with other actions, has greatly improved our financial condition from one year ago,” Tomé said. “We expect to see a significant increase in our return on invested capital this year.”
The division’s 14,500 employees joined TFI in the deal.
UPS said revenue from the sale would go toward debt reduction. In addition, the company said the sale would produce a financial benefit for years to come because the deal triggered a re-measurement of its U.S. pension and post-retirement benefit plans, which showed the company’s long-term liabilities were lowered by $2.1 billion.
Broken down by division, revenue in UPS’ core U.S. domestic unit rose 10.2%, to $14.4 billion compared with $13 billion a year ago. Revenue growth was even more robust in the company’s international segment, which jumped 30% to $4.8 billion from $3.7 billion a year ago. Company officials said its European business had an exceptional quarter.
“The segment delivered another quarter of record operating profit. Total average daily volume was up 12.7%. B2B volume grew 25% on a year-over-year basis with growth across all industries and customer segments,” Chief Financial Officer Brian Newman said.
Revenue in UPS’ Supply Chain Solutions segment rose by 14.1% to $4.2 billion from $3.68 billion a year ago.
More than a year ago, both UPS and its rival FedEx Corp. expanded their delivery service to seven days a week. Tomé said that expansion is going well.
“We are currently halfway through our efforts to expand our existing centers and turn on Saturday operations in more than 200 additional centers. By the end of October of this year, we will cover about 90% of the U.S. population on Saturdays, which will further extend our market-leading Saturday commercial delivery and pickup services and support our ongoing Sunday delivery services,” she said.
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 3 on the TT Top 50 list of the largest logistics companies in North America.
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