UPS freezes management salaries

Global - UPS said it is freezing management salaries and suspending the match for its 401(k) plans, as earnings for the fourth quarter slip.

UPS said adjusted diluted earnings per share fell 22% in the fourth quarter from US$1.07 a share in the previous year to US$0.83. It said fourth quarter profit was equivalent to US$0.25 a share, compared to a loss of US$2.6 billion, or US$2.52 a share for the same period a year ago when the company took a charge when it shifted to a new pension plan for some employees.

"The severe decline in economic activity around the world resulted in sharply lower package and freight volumes for UPS," said chairman and CEO Scott Davis. "Consequently, we're making the tough decisions necessary to adapt our enterprise to today's realities. This includes changes in organisational structure, compensation and network configuration."

These changes include freezing management salaries and suspending the match for its 401(k) plans along with consolidating operating districts, reduced air segments and eliminating some package handling operations.

UPS said the outlook for the year is uncertain at best, and said guidance for the first quarter of earnings per share within a range of US$0.52 and US$0.68.

"Since economists do not expect any meaningful recovery until 2010, earnings in 2009 will suffer," said Kurt Kuehn, CFO of UPS. "Lower volume levels and reductions in package weight will put further pressure on margins. We anticipate the first quarter will be weak, with slight improvements later in the year as initiatives take hold."