Shares of United Parcel Service Inc. (UPS) plummeted 5.6% in premarket trading Tuesday, reaching a six-week low, following the release of its second-quarter earnings report. The package delivery giant cited labor negotiations as the primary reason for its lower-than-expected revenue and subsequently reduced its full-year outlook.
Key Financial Highlights
- Net income for the second quarter was $2.08 billion, or $2.42 per share, compared to $2.85 billion, or $3.25 per share, in the year-ago period.
- Adjusted earnings per share, excluding nonrecurring items, came in at $2.54, surpassing the FactSet consensus of $2.49.
- Revenue experienced a decline of 10.9%, totaling $22.06 billion, falling short of the FactSet consensus estimate of $23.04 billion.
Decline in Business Segments
- U.S. Domestic package revenue saw a decline of 6.9% to $14.40 billion, missing the FactSet consensus of $14.92 billion.
- International package revenue dropped 13% to $4.42 billion, falling short of expectations of $4.71 billion.
- Supply Chain Solutions revenue sank 23.4% to $3.24 billion, below forecasts of $3.55 billion.
Revised Outlook for 2023
UPS has revised its full-year revenue guidance for 2023, lowering it from $97 billion to $93 billion. This revision is primarily due to the volume impact from labor negotiations and the costs associated with the tentative agreement reached with the International Brotherhood of Teamsters on July 25, 2023.
Stock Performance
Year to date, UPS stock has gained 4.8% as of Monday, while the Dow Jones Transportation Average has seen a 22.4% increase and the Dow Jones Industrial Average has risen by 7.0%.