UPS Reports 1.5% Rise in Q4 2024 Consolidated Revenues, Slightly Below Expectations
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UPS Reports 1.5% Rise in Q4 2024 Consolidated Revenues, Slightly Below Expectations

UPS (NYSE: UPS) reported revenues of $25.3 billion for the fourth-quarter of 2024, slightly below expectations.
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UPS (NYSE: UPS) reported its fourth-quarter 2024 financial results, highlighting a notable increase in consolidated revenues, which reached $25.3 billion, marking a 1.5% rise from the same period in 2023. The company also posted a significant improvement in consolidated operating profit, which climbed to $2.9 billion, an 18.1% increase compared to the fourth quarter of the previous year. On a non-GAAP adjusted basis, the operating profit rose by 11.2%.

UPS Fails to Meet Revenue Expectations in Q4 2024

The company’s diluted earnings per share (EPS) stood at $2.01 for the quarter. However, on a non-GAAP adjusted basis, the diluted EPS was $2.75, representing an 11.3% increase over the same period last year. This adjustment accounts for various charges, including a $639 million total charge related to a mark-to-market pension adjustment and other strategic costs.

UPS’s U.S. Domestic segment reported a 2.2% increase in revenue, driven by a rise in revenue per piece and growth in air cargo. The operating margin for this segment was 9.7%, with a non-GAAP adjusted margin of 10.1%.

Meanwhile, the International segment saw a 6.9% revenue increase, attributed to an 8.8% rise in average daily volume. The operating margin for this segment reached 20.7%, with a non-GAAP adjusted margin of 21.6%. In contrast, the Supply Chain Solutions segment experienced a 9.1% decline in revenue, primarily due to the divestiture of Coyote, although this was partially offset by growth in air and ocean forwarding.

Analysts had projected an EPS of $2.52 and revenue of $25.41 billion. UPS’s actual non-GAAP adjusted EPS of $2.75 surpassed these expectations, while the reported revenue of $25.3 billion came slightly below the forecasted figure.

The company’s ability to exceed EPS expectations can be attributed to its strategic cost management and operational efficiencies, which helped mitigate some of the impacts of various charges, including pension adjustments and asset impairments. The U.S. Domestic segment’s revenue growth, driven by an increase in revenue per piece and air cargo, contributed positively to the overall performance.

Despite these achievements, the Supply Chain Solutions segment faced challenges, with a notable decline in revenue due to the divestiture of Coyote. This segment’s operating margin was also affected, although UPS’s overall financial performance remained strong, driven by the robust results in its U.S. Domestic and International segments.

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UPS Expects Share Repurchases of ~$1 Billion in 2025

Looking ahead to 2025, UPS has outlined a series of strategic initiatives aimed at enhancing profitability and operational efficiency. The company expects consolidated revenue to reach approximately $89.0 billion, with an operating margin of around 10.8%. These projections reflect the company’s focus on optimizing its business operations and streamlining its network.

UPS has announced several key actions, including an agreement with its largest customer to reduce volume by over 50% by the second half of 2026. Additionally, the company has insourced its UPS SurePost product and is reconfiguring its U.S. network to achieve approximately $1.0 billion in savings through a comprehensive process redesign. These initiatives are expected to position UPS as a more agile and differentiated entity in the logistics sector.

Capital expenditures for 2025 are projected to be around $3.5 billion, with dividend payments of approximately $5.5 billion, subject to board approval, and share repurchases of about $1.0 billion. The company anticipates an effective tax rate of around 23.5%, reflecting its commitment to maintaining a balanced financial strategy while pursuing growth opportunities in key market segments.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.

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