UPS Profits Fall but Beat Forecasts

MIAMI – United Parcel Service Inc. , the world's No. 1 package carrier, Tuesday delivered better-than-expected quarterly earnings despite profits falling 12 percent from a year earlier.

The Atlanta-based company said in a news release that profits for the three months through Dec. 31 were $645 million, or 57 cents a share. A year-earlier, the company had profits of $724 million, or 63 cents a share.

Wall Street had expected UPS to earn between 46 cents and 55 cents a share, with a consensus forecast of 50 cents a share, according to 17 analysts polled by Thomson Financial/First Call.

"Overall, the results were better than expected and better than the 50 cents to 55 cents guidance the company gave at the end of the third quarter," said analyst Donald Broughton of A.G. Edwards & Sons.

Revenues in the quarter were $8.1 billion, up 2.4 percent from $7.9 billion a year earlier, UPS said in a news release.

"Our cost controls remained highly effective and served to mitigate the effects of the U.S. slowdown, even as we continued to effectively position UPS for the coming economic rebound," UPS Chief Financial Officer Scott Davis said.

UPS said it had yet to see any upturn in the U.S. economy and told investors it sees first quarter 2002 profits between 40 cents and 47 cents a share. Eight analysts surveyed by First Call before Tuesday had UPS earning 40 cents to 54 cents a share, with a consensus forecast of 48 cents a share.

UPS also said it would buy fewer trucks, aircraft and other equipment during 2002, while sustaining spending on information technology projects, as part of cutback in capital expenditures to $2 billion from $2.4 billion last year.

Best known for its fleets of chocolate-brown trucks, UPS said its international volumes continued to grow and had increased 8 percent during the quarter. Increases in exports to Europe were especially strong at 15 percent, the company said. Packages originating in Asia turned up 7 percent.

But overall package volumes declined 0.5 percent to 14.7 million per day. Revenue for the U.S. package business totaled $6.2 billion, or 1.7 percent less than during October, November and December, 2000.

International revenues rose 3.2 percent to $1.1 billion, and revenues from the company's logistics and other non-packagebusinesses surged nearly 55 percent to $746 million, in part because of acquisitions.

UPS also said its results were helped by a $24 million drop in tax expenses and a $37 million payment from the U.S. government to compensate the company for the grounding in the United States of its fleet of cargo jets after the September 11 suicide hijackings.

Full-year 2001 revenues rose 2.9 percent to $30.6 billion.

Full-year operating profit declined to $4 billion, or 12.2 percent less than during 2000. Annual net income declined from $2.9 billion to $2.4 billion before unusual items.

UPS closed up 7 cents at $57.10 on Monday. The company's shares have risen about 12 percent in the last three months, riding hopes the U.S. economic recession has bottomed. By comparison, the Dow Jones U.S. Total Market Index rose roughly three percent during the same three months.