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UPS Delivers Double-Digit Profit Growth in Q4

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UPS peak season

Sales growth online isn’t doing in-store traffic any favors, but it is helping to pad the United Parcel Service’s (UPS) pockets.

The Atlanta-based delivery giant said Tuesday that strong demand from e-commerce shippers contributed to a 2.4% increase in average daily shipments during the crucial holiday quarter, helping the company deliver better-than-expected profit of $1.33 billion, or $1.48 per diluted share.

That was a whopping 198 percent increase from last year’s fourth-quarter profit of $453 million.

Total revenue in the three months ended Dec. 31 was $16.05 million, a mere 1 percent increase from last year’s $15.9 million, which UPS blamed on currency translations and lower fuel surcharges. But on the plus side, the company also lowered its operating expenses by 7.5% from $15.1 million to $14 million.

The company said it delivered 1.3 billion packages during the fourth quarter, an increase of 1.8% over the same period last year; 612 million of those shipments happened during peak season, less than the anticipated 630 million.

Domestically, UPS said it shipped to 1.9 million new addresses during the month of December, citing the “growing influence of online retail,” while Deferred Air shipments rose 15 percent and Next Day Air shipments were up 10 percent.

Meanwhile, its international business surpassed $2 billion in annual adjusted operating profit for the first time, which the company attributed to disciplined pricing and favorable customer and product mix, combined with improved operational performance.

“Our flexible integrated network, close collaboration with customers and the extraordinary efforts of UPSers enabled us to achieve great service and record financial performance this quarter,” David Abney, chief executive officer, said. “This year’s results build on our multi-year strategy to deliver improved shareowner value.”

Richard Peretz, chief financial officer, pointed out that this was the fourth consecutive quarter that UPS exceeded expectations. “Our business generated strong results in 2015. While we face uncertain macroeconomic conditions, we are continuing to invest for profitable growth,” he said, noting that the company anticipates diluted earnings of between $5.70 and $5.90 per share for fiscal 2016.

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