Despite slumping revenue and volume, UPS posted a profit in the fourth quarter, but the world's largest express company said it is freezing management salaries and suspending its 401(k) matching contributions to cut costs.
Volume weakened due to the global economic downturn, and the company said it has also consolidated its operating districts, reduced air segments and eliminated some package-handling operations.
"The severe decline in economic activity around the world resulted in sharply lower package and freight volumes for UPS," Chief Executive Scott Davis said.
Fourth-quarter net income totaled $254 million, up from a net loss of $2.64 billion a year earlier. That includes a write-down of $575 million related to UPS Freight, while last year's results included a charge of $6.1 billion related to pensions.
Revenue fell 5.2 percent to $12.7 billion.
Operating margin rose to 6.3 percent from negative 31.8 percent, while average daily volume declined 2.3 percent to 17.3 million parcels.
Parcel revenue in the United States declined 3.9 percent and average daily volume slid 3.2 percent, but the unit posted an operating profit of $932 million. U.S. next-day air volume fell 10 percent. International parcel revenue fell 8 percent and profit dropped 6.9 percent, although average daily volume was up 4.8 percent.
"The year will undoubtedly be one of the most difficult in UPS's history," said Chief Financial Officer Kurt Kuehn said. "Since economists do not expect any meaningful recovery until 2010, earnings in 2009 will suffer. Lower volume levels and reductions in package weight will put further pressure on margins."
He said the company would provide an outlook for only the first quarter because "visibility into the future has become increasingly difficult" given the global economic uncertainty.
The company sees first-quarter earnings of 52 cents to 68 cents a share; analysts are expecting 65 cents.