UPS Provides Weak FY15 Guidance, Reveals Long-term Growth Plans - Update

(RTTNews) - Package delivery giant United Parcel Service Inc (UPS), Thursday detailed some weak earnings outlook for the full year 2015, while revealing plans to buyback $2.7 billion of its shares in that period.

UPS, at its investor conference, also announced long-term plans for expanding revenue and profit, with focus on industry verticals and international growth markets, efficient capital investment in technologies and footprint, as well improving business to consumer profitability and delivering long-term share owner value.

The company reaffirmed its earnings outlook for 2014, and disclosed plans for a $1 billion accelerated pension contribution to its company-sponsored pension plans during the fourth-quarter 2014 .

For fiscal year 2015, UPS expects earnings of $5.45 to $5.70 per share on revenue growth of 5 to 6 percent. Analysts polled by Thomson Reuters currently expect earnings of $5.71 per share on revenue growth of 5.4 percent. Analysts' estimates typically exclude special items.

For the fiscal years 2015 to 2019, UPS expects revenue growth of 5 to 7 percent average annual rate, earnings per share up 9 to 13 percent per year, return on invested capital between 25 and 30 percent, share repurchases of more than $15 billion and total share owner distributions totaling $30 billion.

UPS said it plans to improve business to consumer profitability through optimized planning and data analysis, and by collaborating with shippers, it expects to optimize the timing of deliveries and realize greater efficiencies.

"UPS is a strong company that has proven its ability to adapt," said UPS Chief Executive Officer David Abney. "The needs of our customers continue to change, and we're changing with them by offering new and innovative solutions."

Further, UPS expects its On-Road Integrated Optimization and Navigation system to reduce an average of seven to eight miles traveled from daily driver routes. Upon full implementation in 2017, this is expected to generate $300 million to $400 million in cost savings.

Kuehn outlined plans for capital investments of 4.5 to 5 percent of revenue annually for 2015 to 2019. The company plans to invest about $2 billion over the next five years to expand its international infrastructure in Europe, Asia and the Americas.

For the fiscal year 2014, UPS continues to expect adjusted earnings of $4.90 to $5.00 per share, while analysts currently expect $4.96 per share.

In October, UPS reported an 11 percent rise in quarterly profit, on growth across its operational segments.

The performance of package shipping bellwethers like United Parcel Service and its rival FedEx Corp. (FDX) are generally considered a strong barometer of overall consumer attitude and business confidence due to the large number of shipments they handle for consumers worldwide.

UPS is trading at $107.68, down $0.27 or 0.25%, on a volume of 4.7 million shares on the NYSE.