UPS Reports Strong Q1 Earnings Amid Lower Package Volume

UPS drivers and trucks at the UPS Centennial Hub in Louisville, Ky. (John Sommers II for Transport Topics)

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UPS Inc. reported first-quarter earnings that exceeded Wall Street expectations.

The Atlanta-based company said its quarterly income increased to $3.3 billion, or $3.05 a share, compared with $2.77 billion, or $2.94, in the first quarter of 2021. Quarterly revenue was $24.37 billion, a 6.4% year-over-year increase from 2021’s $22.9 billion.

Zacks Investment Research expected quarterly revenue of $23.89 and a per-share price of $2.94. Zacks said over the last four quarters UPS has surpassed the consensus earnings per share estimate each time.

“Looking at the first quarter, we were pleased with our results,” UPS CEO Carol Tomé said. “All of our business segments delivered operating profit growth.”

Company officials said one of the key reasons why UPS saw both increased revenue and income in the first quarter was because during the last six months it has raised rates to its customers by more than 5%.


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Average package volume dropped 3.6% from a year earlier, though the company made up for that with a 9.4% gain in revenue per parcel.

Company officials said package volume decreased somewhat as more people are returning to offices with the COVID-19 pandemic receding and there are fewer at-home deliveries.

“Total average daily volume in the U.S. was down 3% or 611,000 packages per day versus the first quarter of last year, driven by a 7.4% decline in residential volume. Looking back to March 2021, stimulus checks arrived at many U.S. households and contributed to difficult year-over-year comps in the first quarter of this year,” CFO Brian Newman said on a conference call with analysts and reporters. “The decline in residential deliveries included a reduction in SurePost volume of about 312,000 packages per day.”

However, business-to-business deliveries increased in the quarter by 3.6% and they now represent 43% of the company’s package volume.

UPS SurePost is the company’s economy service for non-urgent, business-to-consumer needs of low-value packages.

“Our average daily volume fell short of our plan due to several external factors,” Tomé said. “But we remain focused on controlling what we can control.”

Since becoming CEO in June 2020, Tomé has emphasized her vision to push the parcel delivery giant to adopt a “better, not bigger” strategy, which prioritizes lucrative deliveries over volume. UPS has focused much of its growth in industry segments that generate both more overall revenue and profit, including the health care industry and more medium-sized businesses.

Carol Tome


“We continue to pivot toward opportunity. We’ve made tremendous progress over the last two years. We are leveraging the power of our data to become much more agile,” Tomé said. “Under our Better not Bigger framework, we are investing in the capabilities that matter the most to our customers and we are winning in the parts of the market that value our end-to-end network like SMBs, health care, B2B and large enterprise accounts.”

The company also announced it is maintaining its full-year targets for consolidated revenue of $102 billion, which is slightly above Wall Streets expectations of $101.84 billion. Management also announced it has authorized plans to double its stock repurchases for 2022, upping the target to $2 billion for the entire year.

Broken down by division, revenue in the core U.S. domestic unit rose 7.9% to $15.1 billion compared with $14 billion a year ago. Revenue increased faster in the company’s international segment, jumping 5.87% to $4.87 billion from $4.6 billion in the same period a year earlier.

UPS’ Supply Chain Solutions segment revenue rose by 1.86% to $4.37 billion from $4.29 billion a year ago.

“All of our business segments delivered operating profit growth. Of note our Supply Chain Solutions businesses generated record operating profit of $481 million with a record operating margin of 11% driven by strength and forwarding in health care,” Tomé 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 100 list of the largest logistics companies.

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