UPS claims that last quarter’s package volume decreased and announces 12,000 job cutbacks.

In Orleans, Massachusetts, on July 24, 2023, a United Parcel Service truck drives down the Cape Cod coast in search of a house.

Crucial points

• Due to declines in both domestic and international delivery volume, UPS’s revenue on Tuesday fell short of Wall Street projections.
• In an attempt to reallocate resources in 2024, the business also declared 12,000 layoffs.
• In 2024, UPS projects revenue in the $92 billion to $94.5 billion range.

not meeting Wall Street revenue projections, revealing decreases in both domestic and international shipping volume in its fourth-quarter financial report on Tuesday. In an attempt to reallocate resources in 2024, the business also declared 12,000 layoffs.

During a corporate earnings call, CEO Carol Tomé stated that the employment cutbacks will save the company approximately $1 billion in costs.

“To be perfectly honest, 2023 was a challenging and disappointing year; it was unique. We saw decreases in all three of our business segments as well as in volume, revenue, and operating profits, according to Tomé.The package giant’s stock fell almost 7% in early trading.

In comparison to Wall Street estimates, the company’s performance was as follows:

• Adjusted earnings: $2.47 per share as opposed to the predicted $2.46 per share, according to LSEG (previously Refinitiv).
• Revenue: $24.92 billion as opposed to the anticipated $25.43 billion.

UPS recorded net income for the final three months of 2023 of $1.61 billion, or $1.87 per share, as opposed to $3.45 billion, or $3.96 per share, for the same period the previous year. UPS made $2.47 per share after deducting pension and intangible asset one-time expenses.

Revenue fell 7.8% from $27 billion to $24.9 billion in the previous year.

The company announced a decline in average daily volume of 8.3% globally and 7.4% domestically. In addition to freight issues in the Red Sea region and with the Panama and Suez Canals, Tomé stated that international softness was “heavily weighted” in Europe.

Tomé blamed the discussions and the overall macroeconomic climate for the “disappointing” year, even though the results report made no explicit mention of any financial effects from the labor contract negotiations with the Teamsters in August.

Additionally, the business said that it is thinking of selling its Coyote truck brokerage division, which Tomé described as a “very cyclical” industry with “significant earnings volatility.” The CEO also mentioned that starting in 2024, the company intends to require employees to come into work five days a week.

According to UPS’s 2024 projection, revenue is anticipated to fall between $92 billion and $94.5 billion, with an adjusted operating margin of between 10.6% and 10%.

Published by: Reshraman.