An independent contractor driver wears a face mask while operating a delivery truck to deliver N95 respirators outside of a United Parcel Service Inc. (UPS) floor sorting facility in Louisville, Kentucky, USA on Monday, April 13, 2020.
Luke Sharrett | Bloomberg | Getty Images
UPS shares rose more than 4% in premarket trading on Tuesday after the company reported better-than-expected sales and profits during the busy Christmas shopping season, driven by a boom in online shopping due to the Covid-19 pandemic .
Revenue for the Atlanta-based logistics and delivery company increased 21% to $ 24.9 billion for the fourth quarter ended December 31. This was a record for UPS, which posted unprecedented e-commerce sales over the holidays.
The company’s domestic parcel business saw revenue jump 17.4% year over year as the network was filled to the brim with parcels from online retailers, including Amazon.
Here’s how UPS fared relative to investor expectations in the fourth quarter, based on Refinitiv estimates:
- Adjusted earnings per share: $ 2.66 per share versus $ 2.14 expected.
- Revenue: $ 24.9 billion versus $ 22.87 billion expected.
The company posted a sizeable loss of $ 3.26 billion for the quarter after reporting fees of $ 5.6 billion. These charges included a $ 4.9 billion market value annuity, an after-tax impairment loss of $ 114 million, and an impairment loss of $ 545 million related to the Company’s sale of UPS Freight.
UPS did not provide an outlook on future earnings due to the ongoing uncertainty caused by the pandemic.
“Our fourth quarter financial performance exceeded our expectations and I thank all UPS employees for their extraordinary efforts to provide industry-leading service during the vacation.” CEO Carol Tome said on the income statement.
The results come from a record-breaking shipping season fueled by the pandemic. The buyers were already tempted to distribute the number of packages in the system at the same time with Christmas sales in October.
At times, UPS asked drivers to stop collecting packages from some major retailers such as Nike and Gap after they exceeded the capacity allocations set by the delivery company. UPS also introduced surcharges to offset higher costs associated with increased package volumes and the pandemic.
The company’s adjusted operating margin increased slightly to 11.5% for the quarter, although the margin for the domestic shipping unit decreased slightly to 8.8%.
In addition to vacation deliveries, UPS and rival FedEx began shipping Covid vaccines from Pfizer and Moderna to the US in December to bolster their health care business.
“As we look to the New Year after 2020, we are optimistic. We started shipping COVID-19 vaccines in the fourth quarter and are ready to bring hope and health to people around the world,” said Tome.
