UPS upgrades profit forecasts on hopes for a US economic recovery

UPS yesterday announced that it expects a sharp increase in earnings as the US economy improves in 2010.

The company, the world’s largest package delivery service, will be under close scrutiny. Deliveries of packages and goods are often taken as an indicator of the general health of the economy.

Chairman and CEO Scott Davis claimed UPS had weathered the economic doldrums of 2009 effectively, and was poised to capitalise as conditions improved. “UPS has emerged from the worst recession in decades leaner, more focused and better positioned to take advantage of increased global trade,” he said.

The company’s turnover fell 2.5 per cent to $12.38bn (£7.77bn) for its fiscal fourth quarter, although this was an improvement on the consensus projection of $12.23bn.

Revenue was strong in the international package sector, with a 5.8 per cent increase to $2.79bn. This helped counter a much weaker performance for US domestic packages, where revenue was down to $7.55bn, from $7.99bn in the same period last year.

Chief financial officer Kurt Kuehn said that he expected there to be a substantial boost for shareholders over the year.

“We anticipate that diluted earnings per share should be within a range of $2.70 to $3.05, an increase of 17 per cent to 32 per cent over 2009 results,” he said.

However, he warned that 2010 would not be unproblematic. “Economic forecasts indicate gradual improvement as 2010 unfolds,” he added.