Justin Sullivan
United Parcel Service (NYSE:UPS) stock fell sharply in early Tuesday trading after the company posted a mixed Q2 earnings report.
The Atlanta-based transportation company reported revenue decreased 10.9% year-over-year to $22.1B, driven by a 9.9% decrease in average daily volume, which was partially offset by a 3.3% increase in revenue per piece. U.S. domestic package revenue was $12.79B vs. $14.81B consensus and international package revenue was $3.53B vs. $4.68B consensus. Domestic average revenue per pacakge was up 0.8% to $7.67 and international average revenue per package fell 5.7% to $20.91.
Operating margin was 11.1% of sales during the quarter and UPS (UPS) had an adjusted operating margin of 11.7% to miss the consensus estimate of 12.4%.
“We are pleased to have reached agreement with the Teamsters. I want to thank the more than 500,000 UPSers around the world for their hard work and efforts, and for once again providing industry-leading service. And a special thank you to our customers for trusting your business with UPS during our labor negotiations,” said United Parcel Service (UPS) CEO Carol Tomé. “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,” added Tomé.
Looking ahead, UPS (UPS) now expects full-year 2023 consolidated revenue to be about $93B vs. $96.6B consensus and an adjusted operating margin of around 11.8%. The reduced forecast factored in the labor contract with the Teamsters. The shipping company reaffirmed its capital allocation plans and expects capital expenditures to be about $5.3B, dividend payments to be around $5.4B, subject to board approval, and share repurchases to be around $3B.
UPS (UPS) stock tumbled about 6.67% in premarket action on Tuesday. Rival FedEx (FDX) Corporation dropped 1.35%.
