Tuesday, February 02, 2010

UPS posts lower profit, but sees jump for 2010

United Parcel Service Inc. reported higher earnings, helped by much-improved margins, although revenue fell because of weakness in the U.S.

The shipping company also warned the first quarter would be the most challenging of the year, with profitability expected to be only slightly better than last year. Analysts were expecting a 13% per-share increase.

For the full year, UPS projected earnings of $2.70 to $3.05 a share. Analysts surveyed by Thomson Reuters, on average, expected $2.81 a share.

Atlanta-based UPS, viewed as a key barometer for global trade activity, benefited from a surge in shipping business as retailers and manufacturers restocked ahead of the late 2009 holiday season. The company has signaled the economy is improving, but last month also announced 1,800 job cuts and said it still expects the recovery to be gradual.

On Tuesday, UPS posted a profit of $757 million, or 75 cents a share, up from $254 million, or 25 cents a share, a year earlier. Excluding prior-year write-downs, earnings would have fallen from 83 cents a share. Last month, UPS lifted its target range to 73 cents to 75 cents a share.

Revenue fell 2.5% to $12.38 billion, beating Wall Street's latest view of $12.23 billion.

Operating margin surged to 10.2% from 6.3% as average daily volume was flat at 17.3 million packages but package volume rose 1.4%.

U.S. package revenue fell 5.5% as the unit's profit dropped 18%. Daily volume fell 1.9%.

In the company's international packages segment, revenue rose 5.8% as average daily volume climbed 12% and profit increased 28%.

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