UPS holds Investors Conference
UPS Chairman and CEOScott Davis told Wall Street analysts and investors the company is poised for long-term growth, driven by globalization.
He said UPS has made significant progress in developing its global, multi-modal integrated transportation network. The UPS network now handles freight forwarding and less-than-truckload shipping as well as small package transportation on UPS-owned or third-party assets. This unique capability provides a seamless customer experience regardless of the type of shipment, the mode of transportation or the location around the world.
“We are excited about where UPS is today despite any short-term economic challenges,” said Davis.
Chief Financial Officer Kurt Kuehn reviewed UPS’s 2010 goals. He stated the company remains on target to achieve the long-term goals that it revealed at its investor conference in November 2006. From 2005 to 2010 UPS anticipates:
– Revenue growth of 6-to-8% per year.
– Compound annual earnings per share growth of 9-to-14%.
– And return on invested capital of 23-to-25%.
After noting that several economic indicators have recently worsened, Kuehn provided insight into the company’s results for the first two months of 2008. He said the U.S. package segment experienced a solid January, but volume declined in February across virtually the entire customer base. “If these trends continue through March, our earnings guidance for the first quarter will be difficult to achieve,” Kuehn added.
Other areas of the business are performing well. For example, international average daily volume, including U.S. export volume, continues to show strong growth. Kuehn also indicated the international and supply chain segments remain on target for the quarter. Despite short-term economic challenges, UPS’s annual earnings guidance remains USD 4.30-to-USD 4.50 per share.
Davis also noted, “Today, only 20-to-30 percent of trade actually crosses a country’s borders. By 2025, that statistic is expected to be 80 percent. This means there’s a lot of opportunity going forward.”
To capitalize on that opportunity, UPS has enhanced its service offerings to participate in a market in excess of USF 225 billion, encompassing small package, air and ground freight.
Davis and Kuehn were joined at the conference by David Abney, the company’s chief operating officer, and Alan Gershenhorn, senior vice president for worldwide sales & marketing. The four executives detailed the execution of UPS’s long-term strategy by describing a number of initiatives in 2008, including:
– Launch of a new air freight product portfolio.
– Delivery of seven 747-400 jet freighters.
– Opening of a new air hub in Shanghai.
– Expansion of UPS-owned operations in China.
– Acquisition of UPS’s package agent in Romania.
– Addition of Express morning delivery to five more countries.
Acceleration of delivery times on thousands of UPS Freight lanes in the United States.
Davis also said he believes “UPS is well-positioned in relation to global trends, is executing on its strategy and will deliver long-term results that drive shareowner value.”
