UPS CEO: firm is ready for peak season challenges

CHICAGO (Reuters) - Robust U.S. consumer and business demand plus strong growth in Asia drove a higher-than-expected quarterly profit at package delivery company United Parcel Service Inc UPS.NY)N> and its top executive said that after a challenging holiday period last year the firm is ready for the 2014 peak season.

UPS, the world's largest shipping company, and its main rival, FedEx Corp , both considered U.S. economic bellwethers, are heading into their busiest season of the year as the U.S. holidays approach. Last year a last-minute surge in online consumer promotions caused many packages to remain undelivered on Christmas Eve.

The problems especially affected UPS, which has invested $500 million to boost its infrastructure to handle the holiday season this year. Like Memphis-based FedEx, UPS has worked actively with major retailers this year to get a better handle on package volume forecasts to avoid a repeat of last year's debacle.

"Let me assure you, UPS is ready for the challenges and opportunities we expect to face this year," UPS chief executive David Abney said on an analyst conference call that followed the earnings release.

UPS reported earnings per share of $1.32, up 14 percent from $1.16 a year earlier. Analysts expected $1.28 per share.

Atlanta-based UPS also confirmed its full-year profit outlook, predicting earnings per share of between $4.90 to $5.00. Analyst expect full-year earnings of $4.95 per share.

Daily package volumes were up 6.9 percent on the year thanks to shipments between businesses and to consumers.

The package delivery company said it expected package shipments to rise 11 percent in December over the same period in 2013.

Citi Research analyst Christian Wetherbee wrote in a note for clients that the company's outlook "looks a bit soft" and is below Citi's estimate. This implies that "while holiday volume will grow 11 percent, costs may be elevated," he added.

UPS posted revenue of $14.29 billion for the quarter, up 6 percent from $13.52 billion in the same quarter in 2013. That came in slightly above analysts' estimates of $14.2 billion.

In premarket trading, UPS shares were up 1.7 percent at $102.20.

(Reporting by Nick Carey; Editing by Jeffrey Benkoe and Andrea Ricci)