Package delivery and logistics giant United Parcel Service (NYSE: UPS – $94.51) reported a fourth-quarter profit that beat expectations, although revenue came in a bit shy. The company was able to avoid fourth quarter delivery missteps which plagued results in 2013 and 2014. Excluding non-recurring items, earnings per share came in at $1.57, above the consensus of $1.42. Revenue rose to $ 16.05 billion from $15.9 billion, but not quite up to the consensus expectations of $16.2 billion. Domestic package revenue rose 2.6%, thanks in part to strong demand from e-commerce shippers and slightly above expectations. International adjusted operating profit was up 16%, to $624 million, in the fourth quarter, led by strong performance in Europe, but revenue was below estimates. Disciplined pricing, favorable customer and product mix, combined with improved operational performance, drove increased profitability abroad. Supply Chain & Freight adjusted operating profit increased 11%, to $199 million over adjusted 2014 fourth-quarter results and revenue increased 6.0% to $2.6 billion. The inclusion of Coyote Logistics revenue for the full quarter more than offset the impact of softer markets, lower fuel surcharges and actions to improve revenue quality in the other business units.
For the full year, UPS achieved adjusted diluted earnings per share of $5.43, an increase of 14% over adjusted 2014. For 2016, the company expects earnings in the range of $5.70 to $5.90 per share, compared with the Street views of $5.72. Risk-adjusted long-term price appreciation potential remains solid, but uncertainty regarding near-term domestic and global GDP growth may negatively affect results. However, I remain positive for shares of UPS as a proxy for continued e-commerce growth. The shares also yield investors 3.1%, at current levels.