United Parcel Service Fourth Quarter Results Tumble

By Prachi Makkar,   
Money and Investing Writer

United Parcel Service Inc. (NYSE:UPS) is a very well-known company, a household name. When it comes to shipping and mailing, UPS is used to be people and companies all around the world.

It is the world’s largest package delivery company. With new technology and specifically a large societal shift towards online retail, UPS has been busier than ever. UPS is used all around the world to ship a large variety of items and packages. It is a reputable company used by people and companies everywhere.

Many companies use UPS to ship their orders to customers and it has caused the package delivery business to grow rapidly. People expect their packages to arrive as soon as possible and with no problems along the way. The expectations of people and large demand has been giving UPS more problems rather than a higher revenue.

In order to keep up with their business needs, they need to focus on investing in their company. UPS has been around for a while and need to adapt to what the market needs are today.

The company has been facing difficulties keeping up with the growing demands of online retail. They need to focus a lot of time and resources to improving their existing systems and way of doing business to meet the market demand. UPS committed to spending $1 billion in upgrades of their company, procedures, and automating warehouses.

It is more expensive for them to ship to homes rather than make commercial deliveries so, they are also looking to improve that.

Due to a decrease in net income by $1.67 billion from a one- time “mark to market” change on pension assets, UPS lost $239 million or 27 cents a share in the fourth quarter of 2016. After adjusting for the pension issues, net income increased by 1.7% to $1.43 billion.

Their annual revenue grew from &58.36 billion in 2015 to $60.91 billion. Their international segment posted a major profit for the company. It has been growing at a double- digit percentage rate for eight straight quarters. As far as their domestic segment goes, it grew by 5 percent to 19.55 million per day in the fourth quarter.

This was their most busy quarter of the year growing ground delivery as well by 5.4 percent. Despite the pension charge, UPS remained profitable. On an annual basis, they earned $3.43 billion or $3.87 a share. This is down from $4.84 billion or $5.35 a share.

Overall, the company is doing well and has many growth opportunities. The management team talked about how the company is delivering extraordinary performance in their earnings call.

UPS is learning as they go on and adapting quickly to changes. With a growing demand in the online retail and e-commerce space, they will be very busy improving their company to meet customer needs. The company is going to continue to learn, adapt, and grow.

A version of this article appeared in the Tuesday, February 7th print edition.

Contact Prachi at
prachi.makkar@student.shu.edu

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