@ Supply Chain Management


UPS seeking more job cuts

3PLWire alerted me to the news of more job cuts on the way at UPS Supply Chain Solutions. The report from the AP via Yahoo reads,

UPS Inc., the world’s largest shipping carrier, is seeking more job cuts on top of 1,200 positions in its logistics unit it previously said it would cut.
The Atlanta-based company has offered voluntary severance packages to roughly 650 employees at its headquarters and in its Supply Chain Solutions division in the United States.
Those receiving the offers are at least 50 years old and have at least 10 years of experience, spokesman Norman Black said Monday.

In other words, UPS is on a cost cutting spree and according to the report, it might not be done yet.

The cuts are in addition to the 1,200 jobs UPS announced in October that it would shed in its Supply Chain Solutions business, which handles air freight and logistics services.
At an investor conference last month, Chief Financial Officer Scott Davis told analysts there might be more cuts as the company evaluated the best way to deliver non-operating functions such as human resources, finance and accounting, engineering and network planning.

So I wanted to see what might be happening over at UPS and so I headed over to the public financial statements.
Year on Year & quarterly comparison of UPS results
From the Qtr over Qtr EPS Growth Rate, it looks like FY06 results might not be all that good and its certainly trending that way. Let’s see what UPS reports for the year.

On the Interim Income Statements, the only thing that I can see is that SG&A (Selling, General & Administrative Expenses) has been holding steady for 2 quarters at $222 million and reduced from Q1 of 2006 from $252 million. Perhaps, UPS is trying to hold down its operating costs as much as possible through these cost cutting measures which might mean that the top line might not be that great for Q4 and the whole year as well.

Finally comparing UPS with a select few competitors:
The positive side of things for UPS – Net profit margin at 8.8% and sales growth at an astounding 14% for a company of the size of UPS at $46.87 billion of revenue.
However, on the flip side – Income growth over the last year is sluggish at 9.0%. And lastly, if you look at the Relative strength of UPS, the market doesn’t exactly love the stock coming in at an RSI of 57 over the last 3 months.

I guess we have to wait for the 2006 EOY results from UPS to see what might be happening there.

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Category: 3PL, Supply Chain Management, Supply Chain News


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December 2006