Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

UPS lowers 2023 guidance, citing costs related to tentative labor agreement

Published 08/08/2023, 06:09 AM
Updated 08/08/2023, 06:52 AM
© Reuters.

Investing.com -- United Parcel Service Inc (NYSE:UPS) has lowered its full-year financial outlook and posted weaker-than-anticipated second-quarter revenue, as the logistics firm was hit by labor negotiations and weaker U.S. consumer spending.

In July, UPS reached a tentative deal with Teamsters-backed employees to avert a strike that had the potential to disrupt shipments of around a fourth of all U.S. parcel shipments. The Teamsters union said the UPS workers had called for better pay and working conditions, including air conditioning in new models of the group's famous brown trucks.

Citing the "volume impact" and "costs" associated with the agreement, UPS said it now expects annual consolidated revenue to be about $93 billion and adjusted operating margin of around 11.8%. The company had previously guided for a margin of roughly 12.8% on revenue of approximately $97B.

“UPS is stronger than ever. Looking ahead, we will stay on strategy to capture growth in the most attractive parts of the market and make our global integrated network even more efficient,” said chief executive officer Carol Tomé in a statement.

Atlanta-based UPS has previously flagged the impact of a recent pullback in customer expenditures on nonessential items, saying earlier this year that macro conditions will likely keep volumes under pressure.

The concerns were illustrated in the three months ended on June 30. Domestic U.S. revenue at the parcel deliverer slipped to $14.4B, following nearly a 10% decline in average daily volume that was only partially offset by higher prices. Analysts had projected the unit would register a top-line figure of $14.8B.

Total revenue slumped by 11% to $22.06B, missing Bloomberg consensus estimates. Shares in UPS dropped 6.7% in premarket U.S. trading Tuesday.

Adjusted earnings per share of $2.54 was down from $3.29 in the corresponding quarter last year, but still topped estimates of $2.50 thanks in part to lower-than-anticipated operating expenses.


Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.