UPS Fourth-Quarter Earnings Bolstered by Amazon-Driven Demand

Shipping giant UPS posts higher fourth-quarter earnings, driven in part by demand for next-day service from its biggest customer, Amazon.

Shipping giant United Parcel Service  (UPS) - Get Report on Thursday reported higher fourth-quarter earnings, driven in part by strong demand for next-day service in the U.S. over the holiday shopping season, particularly from its biggest customer,  (AMZN) - Get Report

The Atlanta-based company posted adjusted earnings of $1.8 billion, or $2.11 a share, vs. $453 million, or $1.94 a share, in the year-earlier quarter, The per-share results matched the average consensus estimate of analysts polled by FactSet.

Revenue rose to $20.6 billion from $19.8 billion a year ago, a tick below analysts’ forecasts of $20.7 billion.

"Our network improvements from transformation enabled UPS to embrace a surge in demand for air products while at the same time generate productivity improvements and positive operating leverage,” CEO David Abney said in a statement.

UPS said its U.S. domestic segment "experienced growth from a number of large and small-to-medium-sized customers, with the growth led by UPS’s largest customer, Amazon."

“We processed record volume during the quarter as customers took full advantage of the capabilities of our integrated network and broad portfolio of solutions,” said Abney.

For 2020, UPS said it expects earnings per share in the range of between $7.76 and $8.06, which includes forecast weakness on the industrial side of the U.S. and global economies as well as spending “that will significantly increase UPS competitiveness and will be EPS accretive in 2021.”

“Looking to 2020, we will continue to adapt to the changing environment, strengthen our network and create new solutions to support our strategic growth initiatives and help our customers grow and compete.”

Investors weren't quite as enamoured with the quarterly results, with shares of Big Brown down nearly 7% to $107.7 in trading on Thursday.