UPS Projects Revenue Above Expectations

United Parcel Service (UPS) released projections Tuesday that beat estimates, as the delivery giant works to cut costs amid a slowdown in shipping demand.

UPS projected revenue for the 2026 fiscal year of between $108 billion to $114 billion, well above analyst estimates compiled by Visible Alpha. UPS posted $91 billion in revenue for fiscal 2023, and previously said it anticipates revenue for fiscal 2024 of between $92 billion to $94.5 billion.

The company said it expects its adjusted consolidated operating margin for 2026 to come in above 13%, led by a domestic operating margin of at least 12%, both above Bank of America analysts’ expectations.

“We executed the strategy we set forth nearly three years ago by changing almost every aspect of our business. After coming off a difficult market in 2023, the small package industry is poised to return to growth in 2024 and beyond,” UPS CEO Carol Tomé said in a release as UPS held its investor conference in Louisville, Kentucky.

“Over the next three years, we plan to make bold moves to create a growth flywheel in premium markets, while at the same time drive higher productivity and efficiency. The growth and productivity initiatives we are executing will result in higher revenue, expanded operating margins and increased free cash flow to deliver long-term value to our shareowners.”

UPS and rival FedEx (FDX) had a tough 2023 amid a slowdown in shipping demand from pandemic highs. Last year, FedEx announced plans to restructure and cut billions in costs, and its cost-cutting efforts helped it post results last week for the fiscal third quarter of 2024 that beat estimates.

UPS shares pared back early gains and were 7.2% lower at $145.41 as of 12:45 p.m. ET Tuesday. They have lost about 8% year to date.