United Parcel Service (UPS)

Based in Atlanta and incorporated in 1907, United Parcel Service, Inc. (UPS) is the world's largest express carrier and package delivery company. The company also provides specialized transportation and logistics services. Globally, UPS transports over 15 million packages and documents each business day, and its comprehensive portfolio of services are supported by advanced package-flow technology. The company aims to become a leading global commerce coordinator by serving the needs of its customers in distribution, logistics, and commerce. United Parcel Service has three core business segments: US domestic package operations (62% of 2007 revenue), international package operations (21%), and supply chain and freight (17%). US domestic package involves ground delivery services, deferred air delivery, and next day air services. The international package segment handles exports and cargo services. The supply chain and freight business is engaged in logistics, excess value package insurance, and freight and ancillary services. UPS's long-term debt ratings are Aa2 by Moody's (reduced from Aaa in December 2007) and AA- (lowered from AAA in January 2008) by Standard and Poor's.

Continued economic growth worldwide, the acquisitions of Menlo Worldwide Forwarding, LYNX Express, Stolica, and Overnite Corporation, expansion in international markets, and sustainable freight rate hikes are expected to propel long-term earnings growth for UPS. As is the case for all transportation firms, continued economic growth will be a key factor in driving revenue growth for UPS.

In 2005's third quarter, UPS completed the acquisitions of LYNX Express Ltd., one of the UK's largest independent parcel carriers with $295 million in annual sales, for $96.5 million in cash, and Overnite Corporation, a leading, predominately non-union provider of less-than-truckload (LTL), truckload (TL), and dedicated truckload service with 2004 revenues of $1.65 billion and net income of $63 million, for $1.25 billion. This follows the second quarter purchase of Warsaw, Poland-based Stolica, with $64 million in 2004 revenues, and the purchase of Con-way's Menlo Worldwide Forwarding business.

The LYNX and Stolica acquisitions expand the UPS customer base and enhance the spectrum of services UPS is able to offer in Europe, where UPS's business is growing faster than the economy. Moreover, the Overnite transaction positions UPS as a top US LTL carrier, while the Menlo purchase strengthens UPS's ability to provide a broad array of global supply chain solutions and adds worldwide heavy airfreight services to its portfolio.

United Parcel is also expanding its base in China. It is building 20 warehouses and distribution facilities, bringing the total number of centers in the country to 60 by the end of 2006. It intends to invest $100 million in a joint venture with the Sinotrans Group, which is one of China's largest parcel operations. As a result of this agreement, UPS will become the first foreign company to have a wholly owned operation in the express parcel business in China. We view this as a significant investment positive, as it provides access to 330 cities, which account for nearly 85% of China s gross domestic product. In addition, UPS has tripled its weekly schedule, to 18 flights to China, and has added three more flights in 2006 s first quarter for a total of 21 weekly flights. Furthermore, in 2006 s third quarter, the company opened its first retail center in China in Shanghai's central business district, representing the latest in a series of strategic initiatives to expand UPS's operations and brand presence in China. These developments are expected to boost volumes, revenue per shipment, and operating margins, with the growth of International Priority freight, as a percent of the company's total revenue.

Moreover, burgeoning demand for package delivery services is expected to benefit The UPS Store franchisees, which now operate in more than 5,000 locations across the world. Increasing globalization and supply chain complexities are expected to drive demand for supply chain solutions, which would lead to top-line growth for UPS' Non-Package revenue operations.

The board of directors increased the company's share repurchase authority to $10 billion in January 2008 from $2 billion in October 2007, of which the company estimates that it will repurchase roughly $5 billion in 2008 and the remaining $5 billion in 2009. The company repurchased 34.8 million shares for $2.4 billion in 2008's first half, 35.9 million shares for $2.6 billion in 2007, and 32.6 million shares for $2.5 billion in 2006. Furthermore, UPS just increased its quarterly dividend in January 2008 to $0.45 per share from $0.42 per share, thereby enhancing shareholder returns.

Read full report on United Parcel Service, Inc.

Company overview provided by

Company Products/Services/Markets:

Enter Company Products/Services Here

Strategy:

Describe Key Aspects of Company's Strategy Here

Competitors:

Enter Competitors Here

Industry Trends and News:

Enter Industry Trends and News Here

Acquisitions, Divestitures, Major Transactions, Spin-offs :

Enter Acquisitions, Divestiures, Major Transactions, Spin-offs Here

Management – Pros & Cons, Changes:

Enter Management - Pros & Cons, Changes Here

Buy Rationale:

Enter Buy Rationale Here

Sell Rationale:

Enter Sell Rationale Here