UPS supply chain and freight segments remain strong

UPS announced objectives for growing its revenue and profit over the next 3-to-5 years while continuing to invest in new technology and expanded facilities.

Diluted earnings per share are expected to grow 10 to 15 percent from 2011 to 2016, the company’s top executives told analysts and investors late last week.

Addressing analysts during the course of the Investor Conference, senior executives outlined expectations for performance of the U.S. Domestic, International and the Supply Chain segments. Additionally, the company announced major expansion plans for its European air hub in Cologne, Germany, increasing capacity by 65 percent.

“Our long-term outlook remains positive despite recent economic uncertainty,” said UPS Chairman and CEO Scott Davis. “UPS is well positioned to capture the opportunities presented by the mega trends shaping our industry.”

The Investor Conference, built around the theme “Stronger Than Ever…Positioned for Growth,” was held in Louisville in order to display the results of a multi-year, multi-billion-dollar investment program. Over the past six years, UPS has:

• Completed a $1 billion expansion of its high-tech UPS Worldport air hub.
• Opened a new air freight hub and a Global Operations Center for the UPS Airlines.
• Began operations in a new Centennial ground hub.
• Doubled the size of its supply chain and logistics campus.
• Assembled the “youngest” fleet of aircraft in the cargo industry.

UPS Chief Financial Officer Kurt Kuehn summed up the conference by maintaining that UPS business model is “unique,” with a long-term sustainability plan in place.

“Our ever-expanding capabilities create a moat that separates us from our competitors and that will deliver superior returns to shareowners for years to come,” he said.

Jason Seidl, director of Equity Research – Rail, Trucking Air Freight & Logistics at Dahlman Rose & Co., noted that the company’s supply chain and freight business segment posted another strong quarter.

“Revenue increased 7 pecent to $2.32 billion, which was largely in line with our estimate,” he said. “Operating profits climbed 41 percent on the 7 percent revenue growth, driven primarily by improvements in the Forwarding business unit, as a result of favorable rates and revenue management.”

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