Fourth-quarter financial performance exceeded expectations. Those are sentiments echoed by CEO Carol Tome as United Parcel Service, Inc. (NYSE:UPS) delivered impressive financial results that topped Wall Street estimates. The company benefited from a booming e-commerce business that resulted in an increase in packages up for delivery. Average daily volume was up by more than 20%, affirming strong demand for the company’s services.
UPS Q4 Earnings Beat
Likewise, UPS delivered $2.66 in earnings per share against consensus estimates of $2.11 a share. The bottom line was up 26% year-over-year, aided by booming online shopping during the holiday shopping season.
Revenues were also up 21% to $24.9 billion, helped by e-commerce surge conversely, topping consensus estimates of $22.8 billion. Overall operating profit was up 26%, helped by double-digit growth in adjusted operating profits in all the segments.
Domestic package revenues increased 17.4% during the quarter, driven by growth from small and medium businesses. Revenues at the international package division rose 26.8% to $4.8 billion at the back of strong demand in Asia and Europe.
For the full-year, earnings topped estimates on coming in at $8.23 a share against $7.68 expected. Similarly, revenues increased 14.2% to $84.6 billion against $82.55 billion expected. During the fourth quarter, UPS paid $3.6 billion in dividends representing a 5.2% year-over-year increase. Annual free cash flow totaled $5.1 billion.
Outlook Concern
Wary of the continued economic uncertainty, UPS did not issue guidance for revenue and earnings for the current quarter and a full year. However, the company expects capital expenditures to be about $4 billion, with dividends expected to grow subject to the Board's approval. Likewise, long term debt maturities of $2.5 billion are to be repaid once they come due.
The packaging giant has been under pressure in recent months after a blockbuster 2020 whereby it rallied by more than 40%. It has since corrected from record highs in what appears to be a minor correction given the solid underlying fundamentals likely to support further upside action.