UPS Sees 'Difficult' First Quarter

By Ted Reed
TheStreet.com Staff Reporter

UPS matched analysts' adjusted earnings estimates for the fourth quarter, but the package shipper predicted a "difficult" first three months of 2008.

Excluding special items, earnings in the final quarter of last year were $1.20 billion, or $1.13 a share, in line with the Thomson Financial consensus estimate. Revenue rose 6.1% to $13.4 billion. Analysts had estimated $13.1 billion.

The quarter "produced solid growth in spite of a sluggish U.S. economy," UPS said Wednesday. In the year-earlier period, it earned $1.1 billion, or $1.04 a share.

Looking ahead, UPS projected earnings of 94 cents to 98 cents in the first quarter and $4.30 to $4.50 for the full year. Analysts had estimated 98 cents for the quarter and $4.45 for the year.

"While there is more uncertainty in the U.S. economy today than there was a year ago, we remain focused and confident that we will grow our global business," said CFO Kurt Kuehn, in a prepared statement. "We anticipate the first quarter will be the most difficult of the year due to lower profitability from an early Easter and additional interest expense not yet offset by labor contract benefits."

During the fourth quarter, the company ratified a new five-year agreement with the International Brotherhood of Teamsters, resulting in a $6.1 billion payment to withdraw approximately 45,000 UPS employees from the union pension plan.

Including the impact of that charge, UPS had a loss of $2.6 billion, or $2.46 a share.