Time: 2024-07-23
United Parcel Service ( UPS ) missed Wall Street estimates for second - quarter earnings , reporting an adjusted profit of .79 per share for the quarter , below analysts ' estimates of .99 . The company also lowered its full - year adjusted operating margin forecast to 9.4 % , from a range of 10.0 % to 10.6 % . UPS has been slashing costs to lift margins , including cutting 12,000 jobs in January to save billion . The company has said that it expects cost pressures to ease in the second half of the year , as a majority of the labor costs for the first year that rose as part of the new five - year Teamsters contract are absorbed by the second quarter.
Shares of UPS were down 8 % in premarket trading following the earnings report , while shares of rival FedEx fell about 2 % . Analysts had anticipated a modest miss on estimates , but the magnitude of the second - quarter miss , coupled with the large downward revision to the full - year adjusted operating margin guide , surprised many . UPS reported second - quarter revenue of 1.8 billion , below analysts ' estimates of 2.18 billion . However , in a positive development for the company , UPS will replace FedEx as the primary expedited air service provider for the U.S. Postal Service ( USPS ) in October . UPS expects the five - year contract to be profitable in its first year.
UPS , FedEx , and other home delivery providers have been facing subdued package delivery demand since the end of home - bound consumers ' early pandemic e - commerce binge in late 2021 . Demand for doorstep delivery has been lackluster , leading to companies slashing costs to offset the impact on their margins . UPS recently struck a deal to sell off its volatile truckload brokerage business , Coyote Logistics , for about billion to RXO , as part of its cost - cutting measures.
Overall , UPS is working towards improving its financial performance and margins in the face of challenging market conditions . The company is optimistic that cost pressures will ease in the second half of the year , and the new contracts and strategic decisions will help drive profitability in the future . Analysts will be closely watching UPS 's performance in the coming quarters to gauge its ability to navigate the evolving landscape of the package delivery industry.
Business
