AMZN Amazon.com Inc

By Paul Ziobro 

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

The delivery company said it shipped 9% more packages in the U.S. during the holiday period compared to a year prior, and that the growth was driven by Amazon. UPS also said business from the e-commerce giant now represents 11.6% of its overall revenue.

Chief Executive David Abney said UPS also won business from some of its rivals, particularly in the week before Christmas. "We had other people's customers coming to us asking us to take their packages," Mr. Abney said in an interview Thursday.

The 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. But investments in automation and other steps to reduce costs lowered the average cost to process packages by 3.2% in the U.S., boosting profits.

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. Mr. Abney said that over 90% of major retailers are shipping items with UPS and that chains like Target Corp., Gap and Best Buy Inc. are increasing their business with the company.

UPS also is trying to capture more shipments from smaller and medium-size shippers. The company has moved up some of its planned projects this year to speed up shipments, and added extra delivery days, including on Sundays, to cater to all online merchants, Mr. Abney said.

"We're really focused on the entire ecosystem," he said.

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 09:23 ET (14:23 GMT)

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