UPS Reports Strong Fourth Quarter

UPS posted some impressive numbers for the fourth quarter, along with a confident outlook for 2011.

UPS announced adjusted diluted earnings per share of $1.08 for the fourth quarter of 2010, a 44% improvement over the same period in 2009. Global revenue grew 8.4%, generating $1.8 billion in adjusted operating profit, a 40% increase.

For the full year 2010, the company delivered 3.9 billion packages, an average of 15.6 million per day. Revenue increased 9.4%, to $49.5 billion. On a reported basis, operating profit for the year was $5.9 billion, up 55%.

Included among the forward-looking statements are phrases like “uniquely positioned” and “cash flow will continue to be strong, creating a foundation for increasing returns to shareholders.” What’s more, UPS plans to “significantly ramp up share repurchases to approximately $2 billion in 2011.”

UPS’s strong sales for the year aren’t necessarily good news for shippers, according to Gerard Hempstead, president of Hempstead Consulting.

“There is now a sense of empowerment that UPS can take pricing up at will, and it’s reflected in their forward looking statements,” Hempstead says. “If you do the math, the shipments were up about 2% for the quarter, but revenue was up 8%,” Hempstead says. “That translates to shippers having to pay more for the shipments that were transported.”

Even UPS’s deferred air service that was down 2% versus the same quarter in 2009 had revenue up over 4%. “That’s done through real pricing discipline and yield management,” Hempstead notes.

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