Feb. 2 (Bloomberg) -- United Parcel Service Inc. said first-quarter profit would be “slightly better” than a year ago, signaling that the world’s largest package-delivery company expects a recovery to build through 2010.
UPS also said today that its annual per-share earnings will be $2.70 to $3.05. Analysts expected an adjusted profit of $2.81, based on the average of 21 estimates compiled by Bloomberg.
Economists consider Atlanta-based UPS a bellwether for economic health because it moves goods ranging from auto parts to drugs and electronics. International demand has recovered faster than in the U.S., led by increasing shipments in Asia and the U.K.
“It looks like this recession is finally over,” Chief Executive Officer Scott Davis said on a conference call with investors and analysts. “Recovery is underway in many regions of the world, but it will be gradual.”
The Commerce Department said Jan. 29 that the U.S. economy grew in the fourth quarter at the fastest pace in six years as last year’s recession abates.
UPS rose 75 cents to $59.14 at 10:35 a.m. in New York Stock Exchange composite trading. The stock climbed 38 percent in the 12 months ended yesterday.
Shipments from online retail sales were strong in the fourth quarter during the holiday period, as were international exports, Andy Dolny, vice president of investor relations, said in an interview. Manufacturing industries are “still challenged,” he said.
Sales Exceed Estimates
Fourth-quarter net income rose to $757 million, or 75 cents a share, within the range of 73 to 75 cents that UPS preannounced on Jan. 8. Net income a year earlier was $254 million, or 25 cents. Excluding a goodwill impairment charge and a write down in the value of some international operations, the year-earlier profit was $829 million, or 83 cents a share.
Sales in the quarter fell 2.5 percent to $12.38 billion, exceeding the $12.31 billion average of 11 estimates.
“Economic forecasts indicate gradual improvement as 2010 unfolds,” Chief Financial Officer Kurt Kuehn said in a statement. “The first quarter will be the most challenging of the year for UPS with profitability only slightly better than last year.”
Operating profit from international markets rose 19 percent on an adjusted basis as some customers shifted to higher-priced shipments of small packages by air.
UPS also said on Jan. 8 it would eliminate 1,800 management and administrative jobs in the U.S. as it reduces the number of operating districts to 20 from 46 in an effort to streamline its small-package unit, its largest division.
Those changes will result in a first-quarter pretax charge of as much as $80 million and additional costs through the third quarter of next year to retrain and move workers, Kuehn said. Starting in 2011, the restructuring will produce an annual benefit of about 10 cents a share, or as much as $170 million, he said.
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