United Parcel Service posted record quarterly earnings on Tuesday and forecast 2022 revenue above expectations, driven by higher shipping rates and e-commerce demand, sending shares of the logistics giant up 7% before the bell.
Demand for express shipping has risen sharply during the Covid-19 pandemic, especially in business-to-consumer package deliveries, as the temporary closure of many traditional stores drove more shoppers online.
U.S. retailers reported a better-than-expected $886.7 billion in sales during the crucial holiday season, a 14.1% rise from a year earlier. UPS reported an 11.5% jump in revenue to $27.77 billion in the three months to Dec. 31, with the average revenue per piece increasing by 11.3%. The company also forecast revenue of about $102 billion in 2022, beating an average Refinitiv-IBES estimate of $100 billion.
It also expects adjusted operating margins of 13.7% in 2022, above 2021 levels, despite rising labor and fuel costs roiling the industry.
Under Chief Executive Carol Tome, who took charge in June 2020, the world's largest parcel delivery firm has prioritized lucrative deliveries over volume, fighting to win more contracts with healthcare firms and small and medium-sized businesses.
But the company, like rival FedEx, has been grappling with a sharp increase in expenses to hire and retain dependable drivers amid surging coronavirus infections. Atlanta-based UPS expects to deliver its 2023 consolidated revenue and operating margin targets a year early.
The company also hiked its quarterly dividend by 49% to $1.52 per share, sending its stock up 7% to $216.40 in premarket trading.
Adjusted net income rose to a record $3.15 billion, or $3.59 per share in the fourth quarter, beating estimates of $3.10 per share.