Higher spending to gear up for the crush of holiday-package deliveries pushed fourth-quarter profit down 61 percent at UPS and the company gave a tepid outlook for 2015.
The results were roughly in line with the lowered expectations that UPS set two weeks ago, when it warned that profits during the latter part of the year would disappoint.
CEO David Abney said Tuesday the company will control costs and raise prices this year, including surcharges for residential deliveries on peak days. UPS is sticking to its long-term targets for higher earnings, he said.
UPS earned $453 million, or 49 cents per share, in the last three months of 2014, compared with $1.17 billion, or $1.25 per share, a year earlier.
Excluding special items, the company would have earned $1.25 per share, which matched the average estimate of analysts surveyed by Zacks Investment Research. However, it was 3 cents shy of the consensus tallied by another service, FactSet.
Revenue rose 6 percent to $15.90 billion, beating forecasts at both research firms.
The Atlanta company said that 2015 earnings would be between $5.05 and $5.30 per share. The midpoint of that range falls below the $5.26 per share forecast in the FactSet survey.
While revenue grew 6 percent for UPS last year, total operating expenses jumped 16 percent, led by a 20 percent increase in compensation and benefits. That reflected the costs of adding 100,000 seasonal workers.
The company was striving to avoid a repeat of 2013, when it was overwhelmed by last-minute online shopping. Many holiday packages showed up late. Abney said the company set out this past holiday season to win the trust of its customers and “protect the brand.”