What happened
Shares of United Parcel Service (UPS 2.43%) surged 14% on Tuesday after the logistics leader delivered strong fourth-quarter results.
So what
UPS, as the company is known, saw revenue rise 11.5% year over year in Q4 to $27.8 billion. The gains were fueled by an 11.3% increase in average revenue per piece, reflecting CEO Carol Tomé's emphasis on higher-priced shipping services.
Image source: Getty Images.
Tomé took the helm on June 1, 2020, during the early stages of the pandemic. Since that time, she's focused UPS on its most profitable business lines, even if it's meant sacrificing shipping volumes.
"We are focused on growing in the parts of the market that value our end-to-end network," Tomé said during a conference call with analysts. Those areas include business-to-business shipping, healthcare, small- and medium-sized businesses, and large corporations, Tomé said.
The strategy helped to drive UPS' adjusted operating profit up 37.7% to $3.9 billion. The company's adjusted earnings per share, in turn, jumped 35% to $3.59.
Now what
Looking ahead, management sees UPS achieving its 2023 revenue and operating margin goals one year early. The company now expects to generate sales of $102 billion and an adjusted operating margin of roughly 13.7% in 2022.
The shipping titan also increased its cash payout to investors by a whopping 49%, to $1.52 per share. The higher dividend payment reflects Tomé's commitment to pass more of UPS' profits directly to shareholders.
"In June, we told you we were going to target a dividend payout ratio at year-end of 50% of adjusted earnings per share, and we're doing just that," Tomé said. "This represents the largest quarterly dividend increase in our company's history."
