A pandemic-fueled boom in online shopping — particularly during the holiday season — has led United Parcel Service Inc. to a stellar fourth quarter.
The Atlanta-based delivery giant logged adjusted profits of $2.3 billion, or adjusted earnings of $2.66 — a more than 26% gain over the prior year and better than analysts’ forecasts for earnings of $2.14 per share. It also saw a 21% surge in sales to $24.9 billion, which was a record high for the company and bested Wall Street’s expectations of $22.9 billion.
For the three months ended Dec. 31, revenues for UPS’ domestic package division rose 17.4% year over year as its United States-based couriers handled not only orders from e-commerce holiday gifting but also the shipping of Pfizer’s and Moderna’s COVID-19 vaccines.
“Our financial performance in the fourth quarter exceeded our expectations,” CEO Carol Tomé said in a statement. “During the fourth quarter, we began transporting COVID-19 vaccines, and we stand ready to deliver hope and health to people around the world.”
As of 9:30 a.m. ET, its shares were up about 5% to $164.40.
Amid the coronavirus health crisis, UPS faced its own constraints: The company was forced to dramatically adjust to a spike in demand as government-mandated lockdowns and fears of the virus kept consumers indoors. Many turned to online channels like Amazon.com Inc. to do their shopping for everything from everyday essentials to holiday gifts. (Because of the outbreak, Amazon postponed its Prime Day from July to October; this factored into UPS’ Q4 2020 earnings quarter.)
During the peak season, UPS notably increased its rates and added surcharges to deliveries, as well as enforced shipping restrictions on several large brands and retailers — including Nike Inc. and Macy’s Inc. — in a bid to relieve its stretched-thin networks. Last month, it also predicted that millions of packages would be returned following the busy holiday shopping period.
For the full year, the company’s revenues improved 14.2% to $84.6 billion and adjusted earnings amounted to $8.23 per share — both record highs. Due to pandemic-related economic uncertainties, it did not provide an outlook for the fiscal year; however, Tomé added that UPS is “optimistic” heading into the new year.