The Battle for Value, 2004: FedEx Corp. vs. The United Parcel Service, Inc.Presented byGerald OnukwaghuPrashant RajopadhyeMiguel Edwards
The Battle for Value, 2005: FedEx vs. UPS
• FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business, and related information services through focused operating companies competing collectively, and managed collaboratively, under the respected FedEx brand.– FedEx Mission Statement Excerpt
The Battle for Value, 2005: FedEx vs. UPS
• We serve the evolving distribution, logistics, and commerce needs of our customer worldwide, offering excellence and value in all we do. We sustain a financially strong company, with broad employee ownership, that provides a long-term competitive return to our shareowners.– UPS Mission Statement
The Battle for Value, 2005: FedEx vs. UPS
• FedEx History– Business model conceived by Fred Smith in an
undergraduate term paper.– Invests $4 million of his own capital and raises and
addition $91 million.– Launches in 1971– By 2003
• 50,000 Delivery Trucks• 625 Cargo Planes• 217,000 Employees• Handles 2 billion packages• $22.5 Billion with 37% margins
The Battle for Value, 2005: FedEx vs. UPS
• UPS History– Started in 1907 by 19 year-old Jim Casey then called American Messenger Company.– Became Unite Parcel Service of America in 1929 and began shipping packages on commercial airliners. – By 2003
• 88,000 Ground Trucks• 583 Planes• 360,000 Employees• $2.9 Billion in profits on $33.4 Billion
FedEx UPS
Ground Vehicles 50,000 88,000
Aircraft 625 583
Employees 216,500 360,000
Packages Shipped Daily 5.4 million 13 million
Assets $15.4 billion $28.9 billion
Revenues $22.5 billion $33.4 billion
Net Income $830 million $2.9 billion
The Battle for Value, 2005: FedEx vs. UPS
Head-to-Head
$0.00 $10.00 $20.00 $30.00 $40.00
Assets
Revenues
Net IncomeUPS
FedEx
The Battle for Value, 2005: FedEx vs. UPS
FedEx - UPS 2003 Financials
The Battle for Value, 2005: FedEx vs. UPS
• The Competition– Price competition– Operational Reengineering– Information Technology– Service Expansion– Logistic Services
The Battle for Value, 2005: FedEx vs. UPS• The European Market
– In 1992, FedEx sold operations to DHL after sustaining an estimated $1 Billion in losses since 1984.– FedEx continues to deliver throughout Europe, however, leveraging local partners.– UPS enters the European market place in 1988. – Acquires 10 local providers.– Announces $1 Billion of investments in that market– Targets to grow European business to 1/3 of total operations.
The Battle for Value, 2005: FedEx vs. UPS• The Breaking Into China
– Economist suggest China will be the worlds largest economy by 2039.– Chinese air cargo is growing at a steady rate of 30%.– Import/Export shipping market is estimated at $1 Billion. – Intra-China Shipping estimated at $800 Million.– In 2004, the US and China strike an new transportation accord.
• Five times the number of in/outbound flights• Permitted to establish hubs• Access to all airports
The Battle for Value, 2005: FedEx vs. UPS• The Breaking Into China (cont.)
– FedEx and UPS already serving China– FedEx maintained a larger presence in China
• Direct flights to Beijing, Shenzhen, and Shanghai• 11 weekly flights, twice as many as UPS• Served 220 Chinese cities.• FedEx volumes grew by more that 50% between 2003 and 2004
– UPS was active in China since 1988 • Direct flights to Beijing and Shanghai• 6 weekly 747 flights• Served 200 Chinese cities• UPS reported 60% growth in shipments since 2001.
Timeline of Competitive Developments
1982 2003
1982Offers 10:30 AM delivery
1982Establishes next-day air service
1984Acquires Gelco International,
launches Asia-Pacific operations
1986handheld barcode scanner
1985European hub in Brussels
1987Warehouse services to IBM
1988UPS's first air fleet
1989Acquires Tiger International
1990Malcolm Balbridge Award
1990Offers 10:30 AM guarantee
for next-day air
1991Saturday delivery,
Electronic sign. tracking
19922-day delivery
1992Expands delivery to 200 countries
1994Website for package tracking
1994Website for
package tracking
1995Guaranteed 8 A.M. overnight delivery
1995Acquires air-routes serving China,
Establishes Latin America Div.
1999UPS IPO
1999Creates new hub at CDG Airport in Paris
2000Acquires all-cargo air service
in Latin America
2001Acquires Mail Boxes Etc.,
begins direct flights to China
1985Intercontinental air service
between US and Europe
2000B2C home-delivery service
2001Carries USPS packages,
Acquires American Freightway Corp.
2002Home delivery to
cover 100% of U.S.
2002Guaranteed
next-day delivery
2003Acquires Kinko's,
establishes Chinese headquarters
2003Contracts with
Yangtze River Express, Reduces
ground-delivery time
The Battle for Value, 2005: FedEx vs. UPSEnabling Factors
FedEx UPS
Technology Innovations•Customer ordering•Package Tracking•Process Monitoring
Leader in logistics & supply chain management•Customer logistical management
Operations – Malcolm Balbridge National Quality Award for service
Efficiency,
Low-cost provider
Deregulation –In airline industry–In trucking industry
Innovative, entrepreneurial, operational leader
Hub & spoke distribution pattern
Cost reduction through economies of scale, IT, Business Process Re-engineering
Ditto
The Battle for Value, 2005: FedEx vs. UPSInhibiting Factors
FedEx UPS
Domestic express market reached maturity
Ditto
Union Problems, large wage increases
Equity Prices and Returns for FedEx and UPSUPS 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Stock Price Dec 31 $9.25 $10.38 $11.75 $13.13 $14.63 $15.38 $20.00 $69.00 $58.75 $54.50 $63.08 $74.55Dividends per share $0.25 $0.25 $0.28 $0.32 $0.34 $0.35 $0.22 $0.58 $0.68 $0.76 $0.76 $0.92EPS, basic, incl. extra items $0.44 $0.70 $0.81 $0.92 $1.00 $0.82 $1.59 $0.79 $2.54 $2.13 $2.84 $2.57 P/E multiple 21.26 14.82 14.42 14.34 14.55 18.64 12.58 87.34 23.13 25.59 22.21 29.01 Capital appreciation 12.16% 13.25% 11.70% 11.43% 5.13% 30.08% 245.00% -14.86% -7.23% 15.74% 18.18% UPS Cumul. Compound annual return 12.16% 27.03% 41.89% 58.11% 66.22% 116.22% 645.95% 535.14% 489.19% 581.95% 705.95%
FedEx Corp. 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Stock Price Dec 31 $10.19 $12.25 $19.13 $14.97 $19.16 $26.19 $32.06 $54.81 $35.50 $40.00 $53.95 $63.98Dividends per share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.20EPS, basic, incl. extra items -$0.53 $0.25 $0.91 $0.91 $1.35 $1.56 $1.72 $2.13 $2.36 $2.02 $2.38 $2.79 P/E multiple 50.00 20.96 11.36 14.22 16.79 18.70 25.73 15.04 19.80 22.67 22.93 Capital appreciation 20.25% 56.12% -21.73% 27.97% 36.70% 22.43% 70.96% -35.23% 12.68% 34.88% 18.59% FedEx Cumul. Compound annual return 20.25% 87.73% 46.93% 88.04% 157.06% 214.72% 438.04% 248.47% 292.64% 429.57% 528.02%
S&P 500 Index 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Index level 435.71 466.45 459.27 615.93 740.74 970.43 1229.23 1469.25 1320.28 1148.08 879.82 1111.92 Annual return 7.06% -1.54% 34.11% 20.26% 31.01% 26.67% 19.53% -10.14% -13.04% -23.37% 26.38% S&P Cumul. Compound annual return 7.06% 5.41% 41.36% 70.01% 122.72% 182.12% 237.21% 203.02% 163.50% 101.93% 155.20%
Cumul. Market-Adjusted Returns 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003UPS 5.11% 21.62% 0.53% -11.90% -56.51% -65.90% 408.74% 332.12% 325.69% 480.02% 550.75%FedEx 13.19% 82.32% 5.57% 18.03% 34.33% 32.60% 200.83% 45.45% 129.14% 327.64% 372.83%
Cumulative Compound Performance against S & P 500 index
0.00%
100.00%
200.00%
300.00%
400.00%
500.00%
600.00%
700.00%
800.00%
1990 1992 1994 1996 1998 2000 2002 2004
Year
% R
etu
rn
UPS Cumul. Compound annual return
FedEx Cumul. Compound annual return
S&P Cumul. Compound annual return
Economic Profit Analysis for FedExFedex Corp 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Return on Net Assets (RONA) Net operating profit after tax ($mm) $187 $176 $363 $405 $419 $499 $727 $726 $866 $750 $881 $1,418 Beginning capital ($mm) $4,078 $4,344 $4,456 $4,655 $5,081 $5,663 $6,882 $7,863 $8,636 $10,090 $10,870 $12,050RONA (NOPAT/Beginning capital) 4.59% 4.05% 8.15% 8.70% 8.25% 8.81% 10.56% 9.23% 10.03% 7.43% 8.10% 11.77%
Weighted average cost of capital Long-term debt ($mm) $1,798 $1,882 $1,632 $1,325 $1,325 $1,398 $1,385 $1,360 $1,776 $1,900 $1,800 $1,709 Shares outstanding (mm) 216 219 224 225 228 230 295 298 284 297 298 299 Share Price ($) $10 $12 $19 $15 $19 $26 $32 $55 $36 $40 $54 $64Market value of equity ($mm) $2,205 $2,682 $4,274 $3,363 $4,359 $6,018 $9,453 $16,333 $10,098 $11,893 $16,087 $19,104Tax rate (%) 23% 46% 46% 43% 43% 43% 45% 41% 39% 37% 38% 38%Long-term U.S. gov't bonds (%) 7.97% 6.80% 7.53% 7.01% 7.07% 6.89% 5.94% 5.79% 6.19% 5.65% 5.55% 4.76%Senior Baa-rated debt (%) 9.20% 8.11% 8.71% 8.27% 8.46% 8.16% 7.33% 7.69% 8.87% 7.94% 7.96% 6.58%Risk Premium (%) 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60%Beta 1.10 1.15 1.20 1.20 1.40 1.35 1.30 1.15 1.20 1.20 1.20 1.10Cost of equity (%) 14.13% 13.24% 14.25% 13.73% 14.91% 14.45% 13.22% 12.23% 12.91% 12.37% 12.27% 10.92%WACC 10.97% 9.59% 11.61% 11.18% 12.56% 12.60% 12.05% 11.64% 11.79% 11.36% 11.53% 10.36%
Economic Value Added (EVA) RONA (NOPAT/BEGINNING CAPITAL) 4.59% 4.05% 8.15% 8.70% 8.25% 8.81% 10.56% 9.23% 10.03% 7.43% 8.10% 11.77% WACC 10.97% 9.59% 11.61% 11.18% 12.56% 12.60% 12.05% 11.64% 11.79% 11.36% 11.53% 10.36% Spread -6.39% -5.67% -3.46% -2.48% -4.30% -3.79% -1.48% -2.41% -1.75% -3.92% -3.43% 1.41% X beginning capital ($mm) $4,078 $4,344 $4,456 $4,655 $5,081 $5,663 $6,882 $7,863 $8,636 $10,090 $10,870 $12,050 EVA (annual) ($261) ($246) ($154) ($115) ($218) ($215) ($102) ($189) ($151) ($396) ($373) $170 EVA (cumulative) ($261) ($507) ($661) ($777) ($995) ($1,210) ($1,311) ($1,501) ($1,652) ($2,048) ($2,420) ($2,251)
Market Value Added (MVA) Market value of equity ($mm) $2,205 $2,682 $4,274 $3,363 $4,359 $6,018 $9,453 $16,333 $10,098 $11,893 $16,087 $19,104 Long-term debt ($mm) 1,798 1,882 1,632 1,325 1,325 1,398 1,385 1,360 1,776 1,900 1,800 1,709 Capital (market value) ($mm) 4,003 4,564 5,906 4,688 5,684 7,416 10,838 17,693 11,874 13,793 17,887 20,813
Book value of equity ($mm) $1,580 $1,671 $1,925 $2,246 $2,576 $2,963 $3,961 $4,664 $4,785 $5,900 $6,545 $7,288 Long-term debt ($mm) 1,798 1,882 1,632 1,325 1,325 1,398 1,385 1,360 1,776 1,900 1,800 1,709 Capital (market value) ($mm) 3,378 3,553 3,557 3,571 3,901 4,361 5,346 6,024 6,561 7,800 8,345 8,997 MVA (market value - book value) $625 $1,011 $2,349 $1,117 $1,783 $3,055 $5,492 $11,669 $5,313 $5,993 $9,542 $11,816
Economic Profit Analysis for UPSUPS 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Return on Net Assets (RONA) Net operating profit after tax ($mm) $914 $888 $944 $1,448 $1,545 $1,379 $1,909 $3,215 $2,955 $2,846 $2,589 $3,309Beginning capital ($mm) $6,932 $7,195 $8,280 $9,679 $11,796 $12,514 $13,350 $18,845 $17,161 $20,007 $20,802 $23,391RONA (NOPAT/Beginning capital) 13.19% 12.34% 11.40% 14.96% 13.10% 11.02% 14.30% 17.06% 17.22% 14.23% 12.45% 14.15%
Weighted average cost of capital Long-term debt ($mm) $862 $852 $1,127 $1,729 $2,573 $2,583 $2,191 $1,912 $2,981 $4,648 $3,945 $3,149 Shares outstanding (mm) 1,190 1,160 1,160 1,140 1,140 1,124 1,095 1,211 1,135 1,121 1,123 1,129 Share Price ($) $9 $10 $12 $13 $15 $15 $20 $69 $59 $55 $63 $75Market value of equity ($mm) $11,008 $12,035 $13,630 $14,963 $16,673 $17,282 $21,896 $83,538 $66,663 $61,068 $70,839 $84,167Tax rate (%) 40% 43% 40% 39% 40% 41% 40% 58% 39% 38% 35% 34%Long-term U.S. gov't bonds (%) 7.97% 6.80% 7.53% 7.01% 7.07% 6.89% 5.94% 5.79% 6.19% 5.65% 5.55% 4.76%Senior Baa-rated debt (%) 8.34% 7.36% 8.08% 7.71% 7.78% 7.53% 6.71% 6.90% 7.99% 7.16% 6.66% 5.47%Risk Premium (%) 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60%Beta 1.24% 1.13% 1.16% 1.18% 1.18% 1.14% 1.15% 1.15% 1.11% 1.09% 0.95% 0.80%Cost of equity (%) 8.04% 6.86% 7.59% 7.08% 7.14% 6.95% 6.00% 5.85% 6.25% 5.71% 5.60% 4.80%WACC 7.82% 6.69% 7.39% 6.83% 6.81% 6.63% 5.82% 5.79% 6.19% 5.62% 5.54% 4.76%
Economic Value Added (EVA) RONA (NOPAT/BEGINNING CAPITAL) 13.19% 12.34% 11.40% 14.96% 13.10% 11.02% 14.30% 17.06% 17.22% 14.23% 12.45% 14.15% WACC 7.82% 6.69% 7.39% 6.83% 6.81% 6.63% 5.82% 5.79% 6.19% 5.62% 5.54% 4.76% Spread -1.01% -0.24% -1.91% 2.24% 0.63% -1.10% 3.04% 5.04% 5.13% 2.99% 1.89% 5.11% X beginning capital ($mm) $6,932 $7,195 $8,280 $9,679 $11,796 $12,514 $13,350 $18,845 $17,161 $20,007 $20,802 $23,391 EVA (annual) ($70) ($17) ($158) $217 $74 ($138) $406 $950 $880 $598 $393 $1,195 EVA (cumulative) ($70) ($87) ($245) ($29) $46 ($92) $314 $1,264 $2,144 $2,742 $3,135 $4,331
Market Value Added (MVA) Market value of equity ($mm) $11,008 $12,035 $13,630 $14,963 $16,673 $17,282 $21,896 $83,538 $66,663 $61,068 $70,839 $84,167 Long-term debt ($mm) 862 852 1,127 1,729 2,573 2,583 2,191 1,912 2,981 4,648 3,945 3,149 Capital (market value) ($mm) 11,870 12,887 14,757 16,692 19,246 19,865 24,087 85,450 69,644 65,716 74,784 87,316
Book value of equity ($mm) $3,720 $3,945 $4,647 $5,151 $5,901 $6,087 $6,087 $12,474 $9,735 $10,248 $12,455 $14,852 Long-term debt ($mm) 862 852 1,127 1,729 2,573 2,583 2,191 1,912 2,981 4,648 3,945 3,149 Capital (market value) ($mm) 4,582 4,797 5,774 6,880 8,474 8,670 8,278 14,386 12,716 14,896 16,400 18,001 MVA (market value - book value) $7,288 $8,090 $8,983 $9,812 $10,772 $11,195 $15,809 $71,064 $56,928 $50,820 $58,384 $69,315
FedEx vs. UPS Annual EVA
($600)
($400)
($200)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
UPS Annual EVA
FedEx Annual EVA
Financial and Analystical RatiosFedex Corp 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Activity AnalysisAvg days outstanding 44.1 42.6 41.82 41.79 42.67 44.11 39.74 44.57 46.98 46.98 44.25 41.54Working Capital Turnover (42.21) (817.85) 37.64 103.73 93.51 67.84 208.05 47.08 46.37 98.37 28.5 37.11Fixed assets Turnover 2.21 2.25 2.46 2.53 2.5 2.4 2.49 2.67 2.58 2.42 2.48 2.58Total Asset Turnover 1.38 1.35 1.42 1.46 1.53 1.51 1.64 1.58 1.58 1.47 1.49 1.46
Liquidity AnalysisCurrent Ratio 0.87 0.99 1.15 1.05 1.07 1.09 1.03 1.13 1.14 1.06 1.25 1.18Cash Ratio 0.06 0.11 0.26 0.2 0.06 0.06 0.08 0.12 0.02 0.04 0.11 0.16Cash from Operations Ratio 0.36 0.5 0.5 0.58 0.58 0.51 0.61 0.64 0.56 0.63 0.76 0.56Defensive Interval 0.7 0.78 0.91 0.92 0.68 0.72 0.8 0.92 0.94 0.87 0.92 1.02
Long-Term Debt and Solvency AnalysisDebt/Equity Ratio 1.24 1.21 0.95 0.7 0.52 0.51 0.41 0.29 0.37 0.36 0.28 0.28Times Interest Earned 1.36 1.82 2.92 3.73 4.31 5.06 6.42 7.78 7.83 6.58 6.98 10.51Fixed-charge coverage 0.34 0.46 0.64 0.65 0.61 0.57 0.74 0.75 0.72 0.65 0.61 0.83Capital Expenditure Ratio 0.15 0.21 0.22 0.28 0.23 0.22 0.29 0.27 0.23 0.25 0.27 0.22Cash from operations/debt Ratio 0.27 0.36 0.42 0.65 0.71 0.66 1.04 1.29 0.91 0.96 1.23 0.93
Profitability AnalysisMargin before Interest and Tax 3.67 4.67 6.26 6.29 6.07 5.94 6.82 6.93 6.69 6.09 5.79 6.54Net profit margin (1.51) 0.69 2.41 3.17 3.00 3.14 3.17 3.76 3.77 2.98 3.45 3.69Return on assets (1.63) 4.38 6.45 7.09 6.75 6.51 6.94 7.33 7.32 5.71 6.38 6.30Return on total equity (7.20) 3.22 10.62 13.25 11.95 12.19 12.70 13.54 14.38 9.90 10.85 11.39Financial Leverage effect (21.85) 7.43 26.64 28.87 32.51 35.85 29.48 35.63 42.35 28.59 31.87 44.36
Growth 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-'00 00-01 01-02 02-03Sales 3.42 8.60 10.76 9.39 12.13 37.79 5.67 8.84 7.52 4.98 9.12Book assets 6.04 3.44 7.36 4.13 13.83 27.02 9.93 8.25 15.73 3.54 11.39Net income before unusual (gain) loss (196.51) 86.11 45.61 3.42 17.37 37.91 26.73 9.03 (15.10) 24.07 14.48Net income (147.34) 279.40 45.61 3.42 17.37 39.26 25.51 9.03 (15.10) 21.50 16.90Operating income 31.67 45.51 11.40 5.53 9.65 58.27 7.43 4.99 2.14 (0.16) 23.30
Financial and Analystical RatiosUPS Ratios 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Activity AnalysisAvg days outstanding 23.13 23.1 25.66 30.5 34.81 38.57 37.68 39.67 44.79 53.16 54.92 51.6Working Capital Turnover 267.78 4748.29 161.79 80.63 20.39 20.81 14.51 3.9 11.35 10.33 9.82 7.72Fixed assets Turnover 2.59 2.63 2.52 2.34 2.19 2.04 2.18 2.34 2.41 2.28 2.3 2.41Total Asset Turnover 1.83 1.86 1.75 1.66 1.5 1.41 1.45 1.17 1.37 1.24 1.19 1.16
Liquidity AnalysisCurrent Ratio 1.03 1 1.04 1.09 1.35 1.32 1.46 2.65 1.58 1.64 1.57 1.79Cash Ratio 0.06 0.12 0.09 0.07 0.12 0.14 0.44 1.5 0.43 0.35 0.54 0.72Cash from Operations Ratio 0.69 0.74 0.56 0.66 0.6 0.73 0.77 0.53 0.61 0.84 1.01 0.84Defensive Interval 1.71 1.83 1.47 1.36 1.38 1.6 3.12 5.13 3.07 2.82 4.98 4.57
Long-Term Debt and Solvency AnalysisDebt/Equity Ratio 0.23 0.22 0.24 0.34 0.44 0.43 0.36 0.19 0.37 0.5 0.37 0.26Times Interest Earned 18.68 23.59 20.85 17.19 13.71 7.38 12.17 16.08 19.58 16.83 23.15 36.41Fixed-charge coverage 18.68 23.59 20.85 17.19 13.71 7.38 12.17 16.08 19.58 16.83 23.15 36.41Capital Expenditure Ratio 0.23 0.26 0.21 0.22 0.19 0.22 0.25 0.19 0.22 0.29 0.41 0.33Cash from operations/debt Ratio 1.67 2.04 1.43 1.13 0.74 0.94 1.1 0.92 0.76 0.75 1.22 1.22
Profitability AnalysisMargin before Interest and Tax 7.74% 8.20% 7.95% 10.29% 9.07% 7.56% 12.47% 14.74% 15.19% 12.69% 12.81% 13.16%Net profit margin 3.12% 4.55% 4.82% 4.96% 5.12% 4.05% 7.02% 3.26% 9.86% 7.83% 10.18% 8.65%Return on assets 6.47% 9.10% 9.10% 9.24% 8.65% 7.16% 11.69% 4.91% 14.61% 10.68% 12.73% 10.44%Return on total equity 13.87% 20.53% 20.30% 20.25% 19.42% 14.93% 24.27% 7.08% 30.14% 23.41% 25.55% 19.51%Financial Leverage effect 35.59% 46.16% 58.39% 53.41% 60.16% 36.82% 60.70% 39.72% 107.00% 61.51% 56.55% 62.38%
Growth 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-'00 00-01 01-02 02-03Sales 7.65% 10.08% 7.51% 6.29% 40.00% 10.37% 9.13% 10.05% 2.94% 2.04% 7.08%Book assets 5.93% 16.80% 13.08% 18.26% 6.41% 7.26% 35.01% -5.99% 13.73% 6.99% 9.68%Net income before unusual (gain) loss 5.92% 16.51% 10.57% 9.88% -20.68% 91.53% -49.28% 232.28% -17.35% 34.19% -10.94%Net income 56.86% 16.51% 10.57% 9.88% -20.68% 91.53% -49.28% 232.28% -18.23% 32.64% -8.93%Operating income 14.08% 6.74% 39.21% -6.33% -16.31% 81.98% 29.06% 13.39% -14.02% 3.01% 10.01%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
UPS Net Profit Margin
UPS ROE
FedEx Net Prfit Margin
FedEx ROE
The Battle for Value, 2005: FedEx vs. UPS
• Conclusion• Questions