Jan 31, 2019
UPS beats estimates as record spending smooths out seasonal rush
Bloomberg News
,United Parcel Service Inc. reported fourth-quarter profit that beat estimates as record spending helped the company handle surging deliveries during its peak holiday season.
Fourth-quarter adjusted earnings were US$1.94 a share, above Wall Streets’ estimates of US$1.90. UPS said it expects to earn US$7.45 to $7.75 a share this year, or US$7.60 at the midpoint compared with analysts’ average estimate of US$7.69.
Key Insights
-Investors are finally seeing some payoff from spending that rose to more than US$6 billion in 2018, double the $3 billion annual average over the prior five years.
-The company confirmed worries of slowing international growth that hurt FedEx Corp. in the final months of last year, though UPS posted higher sales in that segment.
-Earnings were boosted by efficiency gains from increased investment on automation, new cargo aircraft and package-sorting capacity.
Market Reaction
-Shares jumped 3.8 per cent to US$104.99 in early trading. UPS fell 18 per cent last year, compared with a 15 per cent decline on a Standard & Poor’s index of industrial stocks.