On April 1, 2024, a person walked into the UPS (United Parcel Service) customer center in Los Angeles, California.
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United Parcel Service On Thursday, it reported second-quarter profit and revenue that fell short of expectations and cut its 2024 revenue guidance. Shares fell 7% in pre-market trading.
UPS now expects 2024 revenue of about $93 billion, compared with the previous forecast of $94.5 billion. However, full-year capital expenditures are now expected to be approximately $4 billion, instead of the previous $4.5 billion.
The company also announced that it aims to repurchase approximately $500 million in stock in 2024.
UPS noted that the guidance does not include the impact of the recently announced sale of its freight business, Coyote Logistics, to RXO Logistics. UPS said in a previous press release that the deal is expected to close by the end of this year.
The company also recently signed an agreement to acquire Mexican express delivery company Estafeta as it continues to expand its international business.
How the shipping giant does it Quarter ended June 30 Compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted $1.79, expected $1.99
- income: $21.8 billion vs. $22.18 billion expected
The company reported net income of $1.41 billion, or 1.65 cents a share, for the quarter, compared with $2.08 billion, or $2.42 a share, a year earlier. After adjusting for the impact of resolving “international regulatory issues,” UPS reported earnings of $1.79 per share.
The company reported operating profit of $1.94 billion, down from $2.78 billion a year earlier.
UPS CEO Carol Tomé said in the company's financial report: “This quarter is a major turning point for our company, as our sales in the United States returned to growth for the first time in nine quarters.” “As expected, our sales Operating profit was down in the first half of 2024 compared to last year's report. Going forward, we expect a return to operating profit growth.”
Revenue also fell to $21.82 billion from $22.06 billion in the same period last year, mainly due to declines in the company's domestic and international operations.
Revenue from its U.S. operations fell 1.9%, which the company said was primarily due to changes in product mix. International revenue fell 1%, which UPS attributed to a 2.9% decline in average daily transaction volume.
Revenue in the company's third segment, Supply Chain Solutions, rose 2.6% from the year-earlier period, primarily due to growth in its logistics business, which includes healthcare.
The report comes as weak freight demand and pricing in the shipping industry are leading to what some are calling a global freight recession. Investors turn to UPS earnings to learn whether demand is improving.
UPS recently secured an air cargo contract with the United States Postal Service from a competitor fedex. UPS will become the US Postal Service's primary air cargo provider effective September 30, following the expiration of FedEx's current contract.
Although financial details of the deal have not been previously disclosed, UPS called the award “significant” in an April press release. The deal will generate $1.75 billion in revenue for FedEx in fiscal 2023, the company said.