UPS Results Ride the Surge in Online Shopping

By Paul Ziobro

United Parcel Service Inc. posted higher revenue in the fourth quarter as it handled more packages and squeezed higher prices from shipments, even as costs tied to expanding the network cut into profits.

The delivery giant said it expects its bottom line to improve this year with operating profits up double digits across all off its divisions, as it expects upgrades to its network to start paying off.

UPS shares rose 4.6% in premarket trading to $105.85.

UPS has been spending billions of dollars to open new sorting centers and upgrade its facilities to better handle the increase in online orders rushing into its network. Those investments helped the company hold up well during its latest holiday season, as the extra capacity and new technology to reroute packages around problem spots created fewer backlogs than prior years. UPS delivered 21 million packages a day in the U.S. during the fourth quarter and said its on-time delivery performance was a record.

Domestic operating profit fell during the period, even as its revenue rose 6.3%, due to costs tied to opening 14 new facilities in the quarter.

UPS diffused some concerns about the impact of any global trade disruptions or potential slowdown in places like Europe. Last month, rival FedEx Corp. warned that weak economic conditions overseas would hurt its international business. "Our broad portfolio, diverse revenue base and flexible network help buffer the impacts of global economic softening," UPS CEO David Abney said.

In the fourth quarter, UPS posted a profit of $453 million, or 52 cents a share, up from $1.1 billion, or $1.26 a share, a year earlier. Excluding items like mark-to-market pension adjustments and restructuring costs, adjusted earnings were $1.94 a share, compared with $1.66 last year.

Revenue rose 4.6% to $19.8 billion.

Analysts were looking for UPS to post adjusted earnings of $1.90 a share on revenue of $19.97 billion, according to FactSet.

For the coming year, UPS projects adjusted earnings between $7.45 and $7.75 a share. It said operating profits will rise at a percent rate in the low teens, with all segments up double digits.

The company also projects another big year of capital expenses as it continues to add more automation. It projects capital expenditures between 8.5% and 10% of revenue.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

January 31, 2019 08:32 ET (13:32 GMT)

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