AMZN Amazon.com Inc

By Paul Ziobro 

United Parcel Service Inc. posted higher revenue in the fourth quarter, with a big assist from Amazon.com Inc.

The delivery company said the e-commerce giant contributed the most to its growth during the key holiday period, when it shipped 9% more packages in the U.S.

However, that reliance on Amazon and the shift to e-commerce, where packages tend to ship at lower rates, drove down the revenue that UPS received per shipment, which fell 2.5% across its business.

Due to accounting adjustments for the company's pension plan, UPS reported a quarterly loss of $106 million, or 12 cents a share, compared with a profit of $453 million, or 52 cents a share, a year earlier.

Adjusted for the pension charges and a legal settlement, UPS reported earnings of $2.11 a share, matching the estimate of analysts recently polled by FactSet.

UPS said the quarterly results showed that the significant investments it is making in its network, as it embraces online shopping, paid off. As shoppers demand faster shipping, merchants such as Amazon are increasingly using UPS's faster shipping service.

In addition to delivering more packages from Amazon, which last year ended its relationship with rival carrier FedEx Corp., UPS said it scored other competitive wins during the period.

"We processed record volume during the quarter as customers took full advantage of the capabilities of our integrated network and broad portfolio of solutions," Chief Executive David Abney said in a statement.

Revenue rose 3.6% to $20.57 billion, led by a 6.6% increase in the U.S. package business. Revenue fell in its international and supply chain divisions. Analysts expected revenue of $20.67 billion.

For the current year, UPS projects adjusted earnings between $7.76 and $8.06 a share, compared with analyst estimates for per share earnings of $8.03. The forecast assumed continued weakness overseas and in the U.S. industrial economy, as well as continued spending to appeal more to small- and medium-size business, like expansion of weekend service.

Shares of UPS fell about 1%, to $114.50, in premarket trading.

UPS is more than halfway through a three-year spending spree of billions of dollars to add new facilities, upgrade existing ones with automation and add new technology to help the company handle more packages coming from the rise of online shopping. The latest projects include $1.4 billion to open a large sorting hub in Harrisburg, Pa., and three other automated facilities in Pennsylvania to serve the Northeast U.S.

It also continues to push into new technologies, including expanding a drone delivery service to another medical campus and investing in electronic vehicle manufacturer Arrival. UPS has committed to buying 10,000 of Arrival's vehicles to use in Europe and the U.S.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

January 30, 2020 08:03 ET (13:03 GMT)

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