UPS is strong in the first quarter, driven by pension adjustments

UPS Inc. (NYSE: UPS) reported on Tuesday that diluted earnings per share for the first quarter was $ 5.47. About half of that comes from a net profit of $ 2.4 billion from a favorable adjustment of pension costs under the COVID-19 Relief Act, which was enacted last month. ..

Operationally, it was a good quarter for Atlanta-based transportation and logistics giants. Revenue increased 27% to $ 22.9 billion due to increased demand on three major product lines. The US domestic package segment recorded a 22.3% revenue increase to just over $ 14 billion. International Package revenue increased 36.2% to $ 4.6 billion. UPS’s supply chain and freight division, including the company’s remaining operations, grew to $ 4.2 billion, an increase of 34.3%.

Total operating profit was $ 2.8 billion, up 158%. According to UPS, operating margin reached the high single digits for domestic packaging and supply chains and freight, but rose 23.6% in the international segment. The company reported growth in exports from all regions, but said the top line was driven by strong demand from Asia and Europe.

Diluted earnings per share resulted in a profit of 393% from the first quarter of 2020 and an adjusted profit of 147% from the same period last year. UPS reported $ 2.5 billion in after-tax intermarket pension benefits as a result of the 2021 US Rescue Planning Act. This included groundbreaking pension reforms that would prevent plans funded by multiple employers in the same industry from going bankrupt until 2021. ..

The law freed the company from debt associated with the Teamsters Union’s Central State Pension Fund, which was heading for bankruptcy in the second half of the last decade before the reform bill. UPS completed its central plan in 2007 at a cost of more than $ 6 billion and moved its employees to its own plan.

The law also required the company to “remeasure” its plans at the current discount rate, which was increased from the previous measurement date, the company said. Overall, UPS pension debt fell by $ 6.4 billion, the company said.

According to eight analysts surveyed by Barchart, the median EPS forecast for UPS was $ 1.63 per share. UPS is strong in the first quarter, driven by pension adjustments

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