UPS Says Holiday Surge, Short Season Lowered Profits

Rip Watson
Transport Topics
January 20, 2014
View the original piece

UPS Inc. said an unexpected surge of last-minute Internet gift orders during a compressed peak holiday season strained its delivery system, leading to fourth-quarter earnings of about $1.25 per share, or 18 cents below Wall Street estimates.

“U.S. results were negatively impacted by the challenges of the compressed peak season coupled with an unprecedented level of online shopping that included a surge of last-minute orders,” the UPS statement said, also citing bad weather last month that hampered operations.

The shipping surge during a holiday season that was six shopping days shorter than 2012 created new shipping patterns that led to more than 31 million deliveries Dec. 23. That was the peak delivery day, with volume 7.5% higher than planned. The peak day came six days later than the company anticipated and produced volume 13% above the top delivery day the year before.

The company’s Dec. 23 deliveries were the most ever and 13% over the prior-year peak day. This year’s highest delivery day occurred six days later than expected and was 7.5% greater than planned.

Those earnings per share represent net income of $1.16 billion, based on the latest share count, or a decline of nearly 10% from $1.27 billion, or $1.32 per share in the final 2012 quarter. The 2012 results exclude one-time costs.

Full-year profits of about $4.57 per share also will miss the company’s earlier estimated range of between $4.65 per share and $4.85 per share, Atlanta-based UPS said. The carrier will release its full earnings report Jan. 30.

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