UPS announced its highest ever quarterly operating profit, with record results in each segment thanks to a successful peak and progress on UPS’s better not bigger strategy.
Consolidated fourth-quarter revenue rose 21% from last year to $24.9 billion, and operating profit grew 26% to $2.9 billion.
On the investor conference call, CEO Carol B. Tomé thanked UPSers for their remarkable peak season performance.
“Let me begin with a huge thank you to our more than 540,000 UPSers for not only delivering one of the best peaks in our company’s history, but also for their extraordinary efforts throughout 2020,” she said.
Heading into peak, UPS was faced with a dynamic environment, largely due to market demand exceeding market supply.
“But we were ready,” Carol said. “Our early collaboration with customers and a disciplined approach to executing our peak plans proved to be very successful.”
UPS led the industry in peak season on-time performance. And that success accelerated new customer requests for UPS services, as evidenced by fourth-quarter SMB volume growth of 28.5% (larger customers grew 4%).
Additionally, SurePost redirect reached a new record in December (nearly 50% of SurePost volume was delivered by UPS drivers), and UPS operations outside the U.S. saw their highest peak volume on record.
When COVID-19 vaccines were approved and began distribution at the height of peak season, UPS was ready thanks to reserved capacity in the network. Carol noted UPS has delivered about 225,000 shipments containing 36.5 million vaccine doses at service levels of 99.99%.
Using the corporate strategy as a platform, Carol highlighted Q4 achievements and changes currently underway.
- SMB volume on lanes improved by Our Fastest Ground Ever grew 40%.
- Expanded Digital Access Program; revenue up more than 360% in 2020.
- “Likelihood to recommend” score jumped 13%.
- Accelerated certain annual bonus awards that were paying out over five years.
- Simplifying sales incentive programs and incorporating profitability targets into those programs.
- Creating fewer, but more impactful jobs.
- Launched revenue-quality initiatives; Q4 U.S. Domestic revenue per piece up 7.8%.
- Improved customer mix, with SMBs accounting for 64% of U.S. average daily volume growth in Q4.
- Tightened linkage between investments and returns.
- 88% of U.S. volume will flow through automated sorts by end of 2021.
When summarizing the better not bigger strategy and how that will position UPS in the marketplace moving forward, Carol said, “In many ways, it’s about leaning into segments like healthcare, like SMBs and other high growth areas that value our end-to-end network.”
Read full fourth-quarter results in the press release.