United Parcel Service expects its business to grow significantly next year, mostly as a result of continued cost containment strategies, because U.S. shipping demand is expected to increase only slightly, company officials said.
CFO Scott Davis said UPS expects earnings in 2004 to grow between 12% and 18% and that by 2007 all three of its operating segments - domestic shipping, international shipping, and supply chain services - should be delivering profit margins over 15%.
Davis added at a recent meeting of UPS investors that much of that earnings growth would come from further streamlining domestic operations, extending the reach of its international network and expanding its capability to manage complex supply chains.
However, shipping demand - especially in the U.S. - is expected to increase only slightly next year, Davis said. He expects U.S. domestic volume to grow at 3% to 4% in 2004, although UPS believes its profit margins should go up by some 100 basis points because of its cost control efforts.
International export volume is expected to grow much more strongly, by 8% or more, with profits increasing about 20%, while the company’s supply chain business should achieve revenue increases “in the low double-digit range” while also solidly improving margins.