UPS 2014 Annual Report Download - page 4

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4
Of course, the path forward will be uneven and there
will be periods where the long-term investments we make
will affect our near-term results. This was true in 2014,
when we invested in additional capacity to reaffirm that
UPS could rise to the challenges and opportunities created
by e-commerce. While we delivered on our commitment to
customers, the higher operating costs dampened our profits.
In 2014, our adjusted net income* increased 1.2 percent,
to $4.39 billion on a 5 percent increase in revenue, to
$58.2 billion.
Last year, I was honored that the UPS board asked me to
serve as the 11th chief executive officer in the history of
this great company. I began working part-time for UPS in
1974 while attending Delta State University in Cleveland,
Miss. Forty years later, I sincerely believe we’ve barely
scratched the surface when it comes to the potential of UPS.
As the pace of change accelerates and the world shrinks
even further, the unmatched reach and flexibility of the UPS
network will enable our customers to navigate these changes
more nimbly than their rivals. Yes, I am confident UPS is
networked for growth.
The Five Key Investments for the Future:
At UPS, we’ve long taken pride in our ability to balance the
needs of our customers with the needs of our shareowners.
It is incumbent upon the management team to demonstrate
the operational efficiencies that enable us to generate the
kinds of returns investors have come to expect. We have a
plan in place to do just that. At our Investor Conference in
New York last November, I outlined five key initiatives to
boost our customer service, our productivity and, in turn,
our profitability. They include:
• Adding more capacity to our global network. UPS will
make about $3 billion in capital investments during 2015 as
we accelerate our hub automation and capacity expansion
projects. These investments will enable UPS to build on our
reputation for reliability and service, while boosting our
efficiency and profitability. Last year we announced plans to
invest more than $1 billion in Europe over the next five years,
expanding our ground network capacity to accommodate the
extraordinary growth we’ve experienced there.
• Improving efficiency through innovations like ORION,
our proprietary route-optimization software. By the end
of this year roughly 70 percent of our U.S. drivers will be
using ORION. When fully implemented in 2017, ORION is
expected to generate between $300 and $400 million in
combined cost reduction and avoidance.
0 102030405060
Revenue
in billions of dollars
2014
2009
2010
2011
2012
2013
49.5
53.1
54.1
45.3
55.4
58.2
* See reconciliation of Non-GAAP financial measures on page A1.