A United Parcel Service truck searches for a house while driving along the coast of Cape Cod on July 24, 2023 in Orleans, Massachusetts.
Robert Nickelsberg | Getty Images
UPS fell short of Wall Street revenue estimates on Tuesday, reporting a decline in shipping volume, both internationally and domestically, in its fourth-quarter earnings report. The company also announced 12,000 layoffs as part of an effort to realign resources by 2024.
The workforce reductions will save the company about $1 billion in costs, CEO Carol Tomé said during a company earnings call.
“2023 has been a unique, and frankly, difficult and disappointing year. We have experienced declines in volume, revenue and operating profit across all three of our business segments,” said Tomé.
Shares of the package giant fell about 7% in early trading.
Here's how the company performed compared to Wall Street estimates:
- Adjusted earnings: $2.47 vs. $2.46 per share expected, according to LSEG, formerly known as Refinitiv
- Gain: $24.92 billion versus $25.43 billion expected
For the final three months of 2023, UPS reported net income of $1.61 billion, or $1.87 per share, compared to $3.45 billion, or $3.96 per share, a year earlier. Adjusted for one-time items related to pensions and intangible assets, UPS earned $2.47 per share.
Revenue fell 7.8% to $24.9 billion, compared to $27 billion last year.
The company reported a 7.4% decline in average daily volume domestically and an 8.3% decline internationally. Tomé said international weakness in Europe “weighs heavily,” coupled with cargo complications in the Red Sea region, as well as the Panama and Suez Canals.
While the earnings report did not directly mention the financial impact of August's labor contract negotiations with the Teamsters, Tomé cited the negotiations and the broader macroeconomic environment as contributing to the “disappointing” year.
The company also said it is considering selling its Coyote truck brokerage, which Tomé called a “highly cyclical” business with “significant earnings volatility.” The CEO also added that the company plans to ask employees to return to the office five days a week by 2024.
UPS's 2024 outlook expects revenue to range from $92 billion to $94.5 billion, with an adjusted operating margin of approximately 10% to 10.6%.