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Pension charge pushes UPS 4Q results into the red

David Koenig, Associated Press

DALLAS (AP) -- United Parcel Service Inc. says it was slowed down in the fourth quarter by weak global trade and a disappointing holiday-shopping season.

The company is forecasting a "relatively flat" first quarter and its outlook for the full year came in below analysts' expectations.

UPS shares, which had been up about 10 percent so far this year, fell $1.62, or 2 percent, to $79.61 in trading Thursday morning.

"Overall we still see 2013 as a slow-growth economy," Chairman and CEO D. Scott Davis said Thursday on a conference call with analysts.

Davis said Europe was more stable than a year ago, and "in the U.S., I think we got off to a strong start in January." But, he added, "We're not banking on a robust economy."

UPS is the world's biggest package-delivery company and something of an economic bellwether. It operates fleets of trucks and planes that haul everything from trinkets to industrial equipment between companies and from businesses to consumers.

UPS said that it lost $1.75 billion in the quarter because of a $3 billion charge for pension liabilities, compared with a profit of $725 million a year earlier. Without the pension-accounting charge, UPS said that it would have earned $2.05 billion, or $1.32 per share.

Analysts expected adjusted earnings of $1.38 per share, according to FactSet.

Revenue rose 3 percent to $14.57 billion, beating analysts' forecast of $14.48 billion.

UPS said it expects 2013 adjusted earnings of between $4.80 and $5.06 per share. That would be an increase of 6 percent to 12 percent over 2012, but less than the $5.13 per share that analysts expected. It said the first quarter would be fairly flat, hurt by one less business day than in 2012.

The Atlanta-based company also increased its plan for spending on buying back its own stock this year to $4 billion from $1.5 billion.

UPS said consumer spending on holiday shopping was less than expected, although it still carried a record 500 million packages, including nearly 28 million on the busiest day, Dec. 19.

The company said that disruptions from Hurricane Sandy lowered earnings by 5 cents per share and money spent on the failed pursuit of Dutch delivery firm TNT Express NV cost another penny per share.

In January, UPS walked away from an agreement to buy TNT for $6.9 billion. It would have expanded UPS' presence in Europe, but antitrust regulators there insisted on concessions that UPS considered too costly. Davis said Thursday that the company is still interested in acquisitions but probably nothing as big as TNT, which would have been UPS' largest purchase ever.