Charge drives down UPS profits
UPS took a $4.25 billion fourth-quarter hit in operating profit primarily due to a $6.1 billion payment to withdraw from the Central States multi-employer pension plan as part of its recent labor agreement with the Teamsters union.
Under the labor agreement the Teamsters and UPS will manage their own pension plan covering 45,000 employees. Diluted earnings per share fell to a loss of $2.46 for the three-month period ended Dec. 31.
Minus the adjustment, UPS reported that operating profit rose to
$1.85 billion, compared to $1.81 billion in the same 2006 period.
For the year, UPS earnings were down 91 percent to $578 million.
Despite the slowdown in the U.S. economy, the Atlanta-based integrated logistics provider improved revenue 6.1 percent to $13.4 billion on the strength of a double-digit (12.2 percent) increase in international export volume, growth and firm pricing in the U.S.
package business and shipment gains at UPS Freight.
UPS Freight increased revenues 12.2 percent to $525 million as less-than-truckload shipments per day increased 7.8 percent. UPS performed well relative to other major LTL carriers, some that saw revenues decline in the quarter. UPS Freight results are combined as part of the company’s Supply Chain group and do not break out operating profits. Overall Supply Chain revenue improved 7.8 percent and operating profit increased $83 million compared to a $1 million loss a year ago.
UPS assigned the pension expense to its U.S. Package unit, resulting in a $4.89 billion loss. On an adjusted basis, the U.S.
Package segment posted a $1.21 operating gain, down from $1.30 billion in the fourth quarter of 2006.
Total U.S. daily volume increased 1.4 percent, with ground up 1.5 percent and Next Day Air gaining 2.2 percent. Pricing remained firm, improving 2.3 percent, UPS said.
The international package segment increased operating profit to a record $557 million from $514 million on revenue of $2.87 billion compared to $2.44 billion in the same 2006 quarter.
For the full year, the company delivered a record 3.97 billion packages, an average of 15.8 million per day. Consolidated revenue climbed 4.5 percent to $49.7 billion. Adjusted diluted earnings per share were $4.17, an increase of 8 percent compared to 2006 and at the midpoint of UPS’s earnings guidance for 2007. Before adjustments, operating profit equaled $578 million and diluted earnings per share totaled 42 cents.
“We anticipate the first quarter will be the most difficult of the year due to lower profitability from an early Easter and additional interest expense not yet offset by labor contract benefits,” Chief Executive Officer Kurt Kuehn said. “Therefore, earnings per share for the quarter should be within the range of 94 cents to 98 cents. For the full year, we expect earnings per share to be between $4.30 and $4.50.”
Charge drives down UPS profits
