UPS expects to boost earnings above pre-recession levels this year by expanding in parts of the world where economic growth is strongest and keeping a lid on costs.
The world’s largest shipping company believes the overall pace of global economic growth will slow. But export-heavy countries like Germany and China are going strong and UPS plans to push further into emerging markets. The company’s restructured U.S business — its largest — has improved profit margins.
While growth in Asia remains strong, UPS needs Germany to counter weakness in other countries hit harder by Europe’s debt crisis. UPS forecasts U.S. gross domestic product to grow between 2.5 and 3 percent this year, not enough to significantly drive down unemployment, which stands at 9;4 percent.
“Clearly, the go-go economy of 2007 is not fully back yet,” Chief Financial Officer Kurt Kuehn said in a conference call.
Still, UPS expects to earn between $4.12 and $4.35 in 2011. It made $4.17 per share in 2007, excluding one-time items. The recession began in December of that year.
UPS has revamped its domestic business, leaving it with fewer workers, trucks and planes. That made it more efficient once shipping volume started to improve. The company expects the U.S. unit will continue to improve slowly, as consumers get more confident in their purchases and unemployment declines.
That cautious plan includes slowly increasing hiring and adding to its fleet of aircraft. Kuehn said in an interview with The Associated Press that he expects to add to payroll this year. How many workers UPS hires depends on the rate of economic growth. The company will also take delivery of 7 new planes.
UPS reported a 48-percent increase for the fourth quarter of 2010 as global shipments improved during the critical holiday season.
The Atlanta company earned $1.12 billion, or $1.11 per share. That compares with net income of $757 million, or 75 cents per share, a year earlier.
Revenue rose 8 percent to $13.42 billion.
Revenue in the company’s international package unit rose 9.2 percent. Exports out of China, which include a wide range of goods from toys to electronics, rose more than 30 percent. Exports from Germany increased by double-digits, UPS said.
Revenue in the U.S. improved by 7 percent. The domestic business fetched more money per package as consumers and businesses paid extra to get goods to their destinations faster. UPS also raised base prices and fuel surcharges.
The quarterly results topped Wall Street’s expectations. Analysts polled by FactSet Research forecast a profit of $1.05 per share on revenue of $13.32 billion for the quarter.
For all of 2010, the company earned $3.49 billion or $3.48 per share, up 62 percent from $2.15 billion, or $2.15 per share in 2009.
Revenue rose 9 percent to $49.55 billion.
UPS shares rose $3, or 4.2 percent, to $74.61 in afternoon trading.
