updated 2/2/2010 8:46:08 AM ET 2010-02-02T13:46:08

UPS is seeing more people using cell phones to buy and ship goods over the Internet, a greater number of customers paying for premium services like next-day air and businesses beefing up operations overseas.

The result: a fourth-quarter profit of $757 million, nearly triple the amount from a year earlier. The only blemish was UPS' money-losing freight business, which ships larger items such as gym equipment, grand pianos and automobiles.

The world's largest shipping com continues to position itself for an economic rebound, albeit a gradual one. UPS will spend less money in 2010 than it has historically on things like equipment, airplanes and trucks. It also is cutting jobs — although UPS said Tuesday it will reinstate pay raises for managers.

"UPS has emerged from a very difficult year leaner, more focused and better positioned to take advantage of improving economic trends," CEO Scott Davis told analysts during a conference call after the company reported its results.

The company issued a forecast for 2010 earnings that's consistent with Wall Street expectations.

UPS, based in Atlanta, pinned its strong performance in the final three months of 2009 on a good holiday shipping season and solid international business. Significant growth in online retail sales gave a bump to domestic results. UPS saw strong volumes shipping goods ordered on sites like Amazon.com and BestBuy.com.

Also, in November, Manheim Inc., a vehicle auction company, tapped UPS to oversee its entire supply chain for moving millions of used vehicles each year to the wholesale market.

Fourth-quarter profit equaled 75 cents per share, versus a profit of $254 million, or 25 cents per share, a year earlier.

Revenue fell 2.5 percent to $12.38 billion from $12.70 billion.

Analysts surveyed by Thomson Reuters were expecting a profit of 74 cents a share on revenue of $12.25 billion.

For 2010, UPS expects earnings per share in a range of $2.70 to $3.05. Analysts were expecting earnings of $2.81 per share.

Capital spending will total roughly $1.8 billion, below the historical range, although up from $1.6 billion in 2009. This reflects a reliance on improved technology and fewer employees. UPS is cutting 1,800 management and administrative jobs, less than 1 percent of its global work force, as it shrinks its U.S. small package segment, which represents roughly 60 percent of annual revenue.

Chief Financial Officer Kurt Kuehn said UPS is re-instituting management compensation increases after having frozen salaries for about 40,000 employees last year. He told The Associated Press in an interview that those managers who lost out last year will get raises this year. He did not provide specifics, though he said such raises are typically in line with inflation.

Davis received total compensation valued at $5.2 million in 2008 — his first year as UPS CEO. That was about 16 percent more than his predecessor received in 2007. Davis' compensation for 2009 hasn't yet been disclosed.

UPS and rival FedEx Corp. have seen signs of improved demand. In December, FedEx said the U.S. economy had reached a "turning point," but stopped short of predicting a full recovery.

Kuehn said the current quarter will be the most challenging of 2010. That's mostly because of the gradual nature of the economic recovery. International growth is expected to continue.

In its fourth quarter, UPS' package volume rose 1.4 percent. During the holiday shipping season, global volume exceeded 22 million packages on eight days. It twice exceeded 24 million packages.

For the fourth quarter, air volume increased with next-air up 2.8 percent.

In the quarter, UPS introduced mobile applications for iPhone, iPod and BlackBerry devices. Executives said Internet buying and shipping continues to grow.

International operating profit jumped 27.6 percent. All regions experienced export volume growth, led by Asia and the U.S.

UPS, also known as United Parcel Service, said its freight unit, which expanded in 2005 with the purchase of trucking company Overnite Corp., posted an operating loss for the quarter. UPS cited competitive pricing in the less-than-truckload business.

For all of 2009, UPS' profit fell to $2.15 billion, or $2.14 a share, versus a profit of $3 billion, or $2.94 a share, for 2008. Twelve-month revenue fell to $45.30 billion from $51.49 billion in 2008.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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