UPS hikes 2021 forecast on strong consumer demand

Atlanta, U.S-based United Parcel Service Inc (UPS) has raised its full-year 2021 outlook to revenue growth of 13.8 percent and adjusted operating margin of 13 percent on strong consumer demand expected during the peak season and in the fourth quarter.

UPS reported a 9 percent increase in revenue at $23.2 billion for the third quarter ended September 30, 2021 on a 12 percent rise in revenue per piece in the domestic market.

Consolidated operating profit was up 23 percent to $2.9 billion.

Carol Tomé, chief executive officer, UPS, said the key focus area is reducing the cost to serve through productivity and cost take-out initiatives. “I want to thank all UPSers for delivering what matters with great service to our customers. The actions we are taking under our better not bigger strategic framework to improve revenue quality, enhance productivity and remain disciplined on capital allocation are driving our positive financial performance.”

The domestic segment reported a 7 percent increase in revenue to $14.2 billion and operating profit of $1.4 billion. International operations generated revenue of $4.7 billion, an increase of 15 percent while operating profit was $1.1 billion, up 14 percent.

Supply chain solutions reported an adjusted revenue of $4 billion led by forwarding and logistics, which together increased 35 percent and operating profit of $438 million, up 48 percent.

For the first nine months of 2021, UPS has reported a 16 percent increase in revenue to $69.5 billion from $59.7 billion. Operating profit increased 58 percent to $8.9 billion from $5.6 billion.

Tomé, while speaking to analysts after the results were announced, said UPS has generated more operating profits in the first nine months of this year than any full year “in our history.”

Speaking about the Better Not Bigger Strategic Framework of UPS, Tomé said the three focus areas include improving revenue quality, reducing the cost to serve and disciplined capital allocation.

U.S. domestic business improved pieces per hour by 2.5 percent, and “we are on track to eliminate $500 million of non-operating expenses in 2021 with an additional $500 million opportunity in 2022,” Tomé added.

Brian Newman, chief financial officer, UPS said the pricing environment was firm in the third quarter “and expect similar dynamics in the fourth quarter.”