UPS takes hit from pension accounting change UPS, the global package delivery company, reported strong underlying results for the fourth quarter of 2011, but profits fell 30 per cent as the company took substantial after-tax charges for switching to a new method of accounting for its pensions. For the three months to the end of December 2011, revenues grew about 6 per cent to $14.2bn compared with the same period in 2010, while net income dipped about 30 per cent to $720m, or about $0.74 per share. Last week, UPS said that it would switch to a mark-to-market pension accounting methodology in order to reduce the volatility of its results and present a "cleaner" insight into its underlying operational performance in 2012 and beyond. Analysts argue that those changes will have the effect of flattering UPS's 2012 results by pulling forward certain pension expenses. On Tuesday, UPS said that it expected to earn between $4.75 and $5.00 per share this year, ahead of Wall Street forecasts. Looking to 2012, our expectations are for mixed economic growth around the world, with modest improvement in the US. However, UPS projects another strong year of earnings," said Kurt Kuehn, chief financial officer. He added that UPS would repurchase about $2.7bn of shares in 2012. Excluding the pension charges of $527m in 2011 and $43m in 2010, UPS reported earnings per share of about $1.28, about 21 per cent higher than in the fourth quarter of 2010, as it benefited from solid US demand and improved productivity across the business. Investors watch UPS closely for insights into the health of the global economy. The company delivers packages to companies and individuals around the world and at any moment moves about 2 per cent of global gross domestic product in its networks. In September, UPS laid out ambitious growth targets for the coming years, aiming for an annual compounded earnings growth rate of 10 per cent to 15 per cent until the end of 2016, even "with the scenario of a continued sluggish economy." "UPS delivered record fourth-quarter results in volume, revenue and profitability," Scott Davis, UPS chief executive, said on Tuesday. The quarter was a testament to the power of UPS's global model and the company's ability to operate efficiently in evolving markets. UPS's domestic package operations continued to drive the business in the fourth quarter, as revenues climbed more than 7 per cent to $8.7bn and operating profits, excluding the pension charges, rose about 24 per cent to $1.3bn. The performance of its international business was mixed. Revenue rose about 4 per cent to $3.2bn, but adjusted operating profits slipped about 7 per cent to $497m due to weakness on the trade routes between Asia and the US and currency fluctuations. In pre-market trading, UPS shares, which have climbed about 8 per cent over the past year, rose about 2 per cent to $77.45.