UPS posts Q4 loss on pension charge

The Atlanta, Ga.-based parcel giant and logistics provider reported a net loss of $239 million for the quarter compared with a $1.33 billion net profit in the same 2015 period due primarily to a non-cash, after-tax, mark-to-market pension charge.    UPS Inc. reported a net loss of $239 million ($0.27 per share) for the quarter compared with a $1.33 billion net profit ($1.48 per share) in the same 2015 period, according to the company’s most recent financial statements.
   The company attributed the quarterly loss primarily to a non-cash, after-tax, mark-to-market pension charge of $1.90 per share. Under UPS’s defined benefit pension programs for employees, the company reserves additional funds to cover any shortfall in its long-term pension obligations.
   Excluding the non-cash, after-tax pension charge, earnings per share for the quarter totaled $1.63, still short of analyst’s expectations of $1.69 per share, according to Reuters.
   The Atlanta, Ga.-based parcel giant’s revenues for the quarter rose 5.5 percent to $16.9 billion, as average daily shipment volumes in the company’s U.S. domestic segment were up 5 percent to 19.6 million, while daily international exports jumped 8.4 percent from the prior-year period.
   For the full year in 2016, UPS saw net income tumble 29.2 percent year-over-year to $3.4 billion on revenues that grew 4.4 percent to $60.9 billion. EPS stood at $3.87, compared with $5.35 per share the previous year.
   “Revenue and volume growth accelerated for UPS during the holiday season and we provided high service levels for our customers,” UPS Chairman and CEO David Abney said of the results. “The International segment delivered another extraordinary performance, while the U.S. managed through considerable changes in product mix. Our strategies and initiatives are creating long-term value for both UPS customers and shareowners.”
   “The investments in ORION and automation provided benefits during the quarter,” added Richard Peretz, UPS chief financial officer. “However, bottom-line results were challenged by a shift in product mix and the continued softness in industrial production. Strong growth, combined with our network investments, provide UPS with great opportunities for many years to come.”
   Looking ahead to 2017, UPS is expecting adjusted diluted EPS between $5.80 per share and $6.10 per share, including $400 million in pre-tax currency headwinds. Analysts are projecting EPS of $6.17 in 2017, according to Thomson Reuters I/B/E/S.
   Abney told analysts on the company’s earnings conference call he is looking forward to working with President Donald Trump’s new administration, but stressed that UPS believes strongly in free trade.
   “We believe a key to continued global economic growth is the expansion of free trade,” he said, according to a transcript of the call, noting that bilateral agreements between the United States and its trade partners have led to a “real increase” in both inbound and outbound parcel volumes.
   Abney said he believes President Trump is “really not against trade agreements,” but is focused on negotiating deals that are “fair from the U.S. perspective.”