Key Takeaways
- UPS shares tumbled Tuesday after the shipping giant reported second-quarter profits plunged over 30% from a year ago and missed analysts’ estimates.
- The company, and its shipping rival FedEx, have seen demand fall amid a pullback from pandemic highs for package deliveries.
- UPS also narrowed its revenue outlook and lowered its operating margin projections.
Shares of United Parcel Service (UPS) tumbled 8% in pre-market trading Tuesday after the shipping giant reported second-quarter earnings that were lower than analysts expected, amid a pullback from pandemic highs for package deliveries.
Revenue from the company’s shipping operations fell just over 1% from the same time last year to $21.8 billion, while analysts had expected revenue to rise to $22.18 billion, according to estimates compiled by Visible Alpha.
Profits fell by a wider margin, as UPS reported a 32% drop in net income to $1.41 billion, down from $2.08 billion the same time last year and below estimates.
UPS Narrows Revenue Outlook, Restarts Buyback Program
UPS narrowed its revenue outlook for the full fiscal year, projecting revenue of roughly $93 billion, compared to a previously projected range of $92 billion to $94.5 billion. The company also lowered projections for its adjusted operating margin to roughly 9.4% for the year, below previous projections of 10% to 10.6%.
CEO Carol Tomé said Tuesday that UPS returned to growth in terms of shipping volume for the first time in nine quarters, suggesting the normalization from pandemic highs could be nearly complete for UPS and shipping rivals like FedEx (FDX). Tomé said the growth should allow UPS to return to growing its profits in the second half of 2024.
UPS also announced plans to restart its stock buyback program with $500 million over the rest of 2024, with plans to target $1 billion annually going forward.
Shares of UPS down 8% at $133.54 as of 8:20 a.m. ET Tuesday following the release.