UPS sees red on pension fund value

UPS posted a rare net loss in the fourth quarter, though it was the result of a charge related to the value of its pension fund and the Sandy Springs company said quarterly profit grew otherwise.

The shipping and logistics giant also reported an annual profit for 2012 of $4.39 billion, up 1.8 percent, not including the pension-related charge.

In a conference call, executives said online retailers’ efforts to get orders to customers faster is boosting UPS’s pricier next-day air business.

On its busiest day of the holiday season, UPS put 8 million packages on its airplanes, 1 million more than 2011’s peak. Kurt Kuehn, the Sandy Springs logistics company’s chief financial officer, said retailers often trade up on shipping to speed order delivery.

UPS had a better-than-expected start to the year, Kuehn said, as people shopped online with gift cards or returned presents.

“It’s dragging Christmas into January for us,” he said.

Kuehn said he expects 2013 to be “less exciting, in a good way,” with less economic volatility than 2012.

UPS still sees growth in Europe, despite its failed attempt to acquire Dutch package delivery company TNT Express. The European Commission on Wednesday rejected UPS’s $6.77 billion bid for the company, though UPS two weeks ago said it would not go forward with the deal.

UPS will pay a $267.4 million breakup fee, and it spent $30 million related to the failed acquisition in the fourth quarter alone.

The company paused a number of initiatives while pursuing the deal, Kuehn said, but will now restart product launches and other initiatives, and will consider purchasing other small companies.

“I think it was a distraction,” he said. “We’re glad to be back and focused.”

UPS posted a $1.75 billion net loss in the fourth quarter, citing a $3 billion charge from adjusting the value of its pension plan to the market. With interest rates remaining low, UPS and other companies aren’t earning much for the assets they’ve socked away to pay employee pensions. Excluding that charge, the quarterly profit was $1.28 billion, up 1.8 percent. Both revenue and total package volume rose 2.9 percent.

The company will use some of the money set aside to buy TNT to purchase its own stock, and it expects 2013 earnings per share to rise 6 percent to 12 percent.

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