UPS Results Ride the Surge in Online Shopping -- Update
31 Janvier 2019 - 5:01PM
Dow Jones News
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.
The results and outlook boosted UPS shares 6% in recent trading
to $106.99, as the solid performance during the holiday season and
higher prices showed progress the company is making in its
turnaround plan.
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 expects some of that pressure to abate this year. One reason
is a focus on generating more profitable revenue by targeting
smaller and medium-size business and handling more health-care
shipments, which can carry better margins than shipping packages
for a large customer like Amazon.com Inc.
"We do see 2019 as a pivot point," UPS Finance Chief Richard
Peretz said on a conference call Thursday.
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.
UPS CEO David Abney said the company is seeing some of the same
headwinds internationally, but that there is reason for optimism
too, including online shopping. "E-commerce is providing all kinds
of opportunities," Mr. Abney said Thursday.
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, including 18 projects to
build new or retrofit older facilities. 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 10:46 ET (15:46 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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