United Parcel Service (UPS) faced a turbulent second quarter, reporting financial results that fell short of expectations and prompting a sharp decline in its stock value by 12%, marking its worst performance on record.
UPS Chief Executive Officer Carol Tomé acknowledged the challenges during the company’s earnings call, citing revenue that narrowly missed projections due to current momentum in business volume. As a result, UPS revised its 2024 revenue guidance downward to approximately $93 billion, down from a previously anticipated $94.5 billion. The company also adjusted its full-year capital expenditures forecast to around $4 billion, a decrease from the initial estimate of $4.5 billion.
The earnings report for the quarter ended June 30 revealed adjusted earnings per share of $1.79, lower than the expected $1.99 per share. Revenue totaled $21.8 billion, also below Wall Street expectations of $22.18 billion. Net income for the quarter was reported at $1.41 billion, or $1.65 per share, down from $2.08 billion, or $2.42 per share, in the same period last year. Adjusting for an international regulatory matter impact, UPS’s earnings per share were $1.79.
Operating profit for the quarter amounted to $1.94 billion, a decrease from $2.78 billion year-over-year.
Despite the financial setbacks, Tomé highlighted significant milestones, including the return to volume growth in the U.S. for the first time in nine quarters. She expressed optimism regarding future profitability, stating that the company expects to achieve operating profit growth going forward.
UPS attributed the decline in revenue to decreases in both domestic and international segments. The U.S. operation saw a 1.9% drop in revenue, primarily due to changes in product mix. The international segment reported a 1% revenue decline, influenced by a 2.9% decrease in average daily volume.
Looking ahead, UPS anticipates managing cost pressures associated with its labor contract signed with the International Brotherhood of Teamsters, which included significant wage increases. The company foresees these pressures moderating in the latter half of the year, positioning it for improved financial performance.
UPS also recently announced the sale of its trucking business, Coyote Logistics, to RXO, Inc., and plans to use proceeds to fund share repurchases totaling approximately $500 million. Additionally, UPS is poised to acquire Mexican express delivery company Estafeta by the end of the year, further expanding its operational footprint.
