UPS Profit, Package Volume Fall in Q4United Parcel Service reported lower fourth-quarter profit on weaker package volume yesterday.
Profit for the three months through Dec. 31 was $645 million, down from $724 million a year ago. Revenue was $8.1 billion, up 2.4 percent from a year earlier.
UPS, Atlanta, said its international volume rose 8 percent in the quarter. Increases in exports to Europe were especially strong at 15 percent. Packages originating in Asia were up 7 percent.
On the U.S. front, UPS said the holiday season began slowly but accelerated as Christmas neared, helped by gains in shipping from e-commerce businesses. UPS also reported that Web tracking of packages by customers spiked past 8.6 million on the busiest day.
"The full quarter for the U.S. package business saw a strengthening of ground volume over the course of the three months, along with a strong recovery in Next Day Air volume, which ended down only 0.6 percent," UPS chief financial officer Scott Davis said. "The non-package sector produced significant revenue gains during the quarter, with particular growth momentum in logistics and a firming in freight services."
UPS also said it was helped by a $24 million drop in tax expenses and a $37 million payment from the U.S. government to compensate for the grounding in the United States of its fleet of cargo jets after the Sept. 11 suicide hijackings.
Still, overall package volume declined 0.5 percent to 14.7 million per day. Revenue for the U.S. package business totaled $6.2 billion, 1.7 percent less than in fourth-quarter 2000. International revenue rose 3.2 percent to $1.1 billion, and revenue from the company's logistics and other non-package businesses surged nearly 55 percent to $746 million, in part from acquisitions.
Davis said that the UPS has yet to see any upturn in the U.S. economy. Therefore, he said, capital expenditures will be less than $2 billion for the year, down from the $2.4 billion spent in 2001. Spending restraints will affect facilities, vehicles and aircraft, while most information technology projects will continue to be pursued.
Meanwhile, the UPS and International Brotherhood of Teamsters begin negotiations Jan. 31 on a contract to replace the five-year pact that expires July 31.