UPS Parcel Volume Decline On Higher Prices

Scott Peters
27 Jul, 2022
New York City

United Parcel Services increased 44 cents to $181.90 after the company reported June quarter sales increased 5.7% from a year ago to $24.8 billion. 

Net income in the quarter increased 6.5% to $2.9 billion from $2.7 billion a year ago and diluted earnings per share increased to $3.25 from $3.05. 

Supply chain revenues, which boomed during the pandemic era, rose only 0.7% to $4.2 billion. 

Average revenues per package increased 2.3% to $7.61 and total international package revenues including export revenues rose14.8% lifting the consolidated average revenues increase to 11.9% to $13.72. 

The price increases drove most of the revenue gains in the quarter. 

 

U.S. Domestic Parcel Volume Falls

U.S. domestic package revenues increased 7.3% to $15.5 billion and international package revenues increased 5.3% to 5.1%. 

Average daily parcel volume declined 9.2% driven by 13.4% fall in the U.S. and 4.4% in exports volumes. 

U.S. domestic package revenue increase was driven by 11.9% increase in revenues per piece with fuel surcharge of 400 basis points increase and the remainder 790 basis points increase was driven by base rate increase, fuel prices, and mix improvements.  

Average daily parcel volume in the U.S. declined 4.0% to 19.7 million from 20.5 million a year ago. 

 

Dividends and Stock Repurchase

UPS said it plans to return to shareholders $5.2 billion in dividends and the company lifted its stock repurchase limit to $3.0 billion in 2022. 

 

Outlook 

The company reaffirmed its full-year revenues estimate of $102 billion and capital expenditure of 5.4% revenues or $5.5 billion. 

UPS estimated full-year 2022 domestic revenues to increase 5.5% and international revenues to grow in low-single digits.

Supply chain revenues in the full-year are estimated to be near $9.0 billion and consolidated operating margin of 13.6%.   

Free cash flow in 2022 is estimated around $9.0 billion.