UPS issues long-term financial objectives

Transportation and logistics bellwether UPS yesterday released its long-term growth strategies and financial outlook from its recent investor conference held in New York.

The Atlanta-based company’s management team made presentations based on theme of “Networked for Growth,” which was comprised of various plans geared towards future revenue and profitability, including: a heightened focus on industry verticals and international growth markets; efficient capital investment in technologies, capabilities, and footprint; customer solutions that leverage the global UPS network; improving business-to-consumer (B2C) profitability; and delivering long-term UPS shareowner value.

UPS also laid out its financial goals for 2015 to 2019, which include:
-revenue growth of 5 percent to 7 percent average annual rate;
-earnings per share up 9 percent to 13 percent per year;
-return on invested capital (ROIC) between 25 percent and 30 percent; and
-share repurchases of more than $15 billion and total shareowner distributions totaling $30 billion

“UPS is a strong company that has proven its ability to adapt,” said UPS Chief Executive Officer David Abney in a statement. “The needs of our customers continue to change, and we’re changing with them by offering new and innovative solutions.”
“UPS provides superior customer benefit by connecting a broad portfolio of solutions to the UPS global network. When coupled with efficient investment in technology, UPS generates substantial value for customers and shareowners.”

For 2015, UPS set guidance of annual revenue growth being up 5 percent to 6t percent annually, with earnings per share up 10 percent to 15 percent between $5.45 to $5.70.

Other notable takeaways of the financial outlook included: capital investment plans of 4.5 percent to 5 percent of revenue annually from 2015 to 2019, with plans to invest roughly $2 billion over the next five years to expand its international infrastructure in Europe, Asia, and the Americas;  and plans to improve B2C profitability through optimized planning and data analysis, adding that collaboration with shippers to optimize timing of deliveries.

UPS also noted that it expects its On-Road Integrated Optimization and Navigation (ORION) system to reduce an average of seven to eight miles traveled from daily driver routes, and when it is fully implemented in 2017 UPS said ORION is expected to generate $300 million to $400 million in cost savings.