UPS, which moves everything from small packages to giant freight shipments through in-house and contracted logistics services, announced earnings projections for 2013 in the range of $4.80 to $5.06 cents per share, an increase of 6 to 12 percent compared to 2012 adjusted results.
But the earnings forecast is lower than the consensus estimate of analysts, reflecting weak shipping demand and a 200 million-euro breakup fee owed to Dutch express carrier TNT after the European Commission blocked their merger.
"2012 presented its challenges, most notably weak global trade," Scott Davis, UPS chairman and chief executive officer, said in a statement. “Despite modest macro growth expectations for 2013 and uncertainty in the U.S. caused by the lack of progress in Washington, the UPS business model will deliver consistent results, with operating profit growth in all segments.”
UPS posted a $1.75 billion loss in the fourth quarter versus a $759 billion profit in the last three months of 2011, after taking a $3 billion after-tax charge for pension and retirement benefits to meet accounting requirements for marking liabilities to reflect current market value rather than book value. On an adjusted basis, net income was $1.27 billion, up from $1.25 billion in the year-ago quarter, with operating profit of $2 billion versus $1.2 billion in the fourth quarter of 2011.
During the quarter, UPS delivered 18.8 million packages per day, up 2.9 percent from the prior-year period. Consumer spending during the holiday season fell slightly below expectations, but UPS said it still set records by delivering more than 500 million packages, including almost 28 million on its peak day. The company said Hurricane Sandy caused a 5-cent per share drag on earnings. Fourth quarter revenue grew $40 million to $14.57 billion.
UPS's domestic package segment saw its adjusted fourth-quarter operating income reach $1.38 billion from $1.32 billion a year ago. UPS Next Day Air daily package volume grew 7.7 percent, while ground delivery improved 3 percent on the strength of online retailing. The group's operating margin reached 15.4 percent.
On an adjusted basis, international profit dipped to $499 million from $505 million as customer and product mix changes drove a 3.5 percent decline in export yields. UPS said demand for services in Asia and Europe led to a 5.5 percent increase in average daily export volume.
Revenue in the Supply Chain and Freight segment increased $94 million, or 4 percent, compared with the same 2011 quarter. Adjusted operating profit fell to $172 million from $199 million. Freight forwarding revenue improved on strong tonnage increases in air freight, while operating margin was negatively impacted by an increase in purchased transportation rates on Asia-outbound freight during a period of accelerated demand in the market, UPS said.
The warehousing and distribution business achieved revenue growth of more than 10 percent, but operating margin declined due to investments in technology and new facilities to support healthcare and high-tech customers.
On the trucking side, UPS Freight revenue increased 6.2 percent with LTL gross weight hauled up 4.9 percent and LTL revenue per hundredweight up 1.5 percent. For the year, UPS revenues grew 3.6 percent to $32.86 billion, with a 79 percent slide in net income to $807 million. On an adjusted basis, annual earnings grew 1.8 percent to $4.4 billion. - Eric Kulisch