UPS Reports Lower Earnings as Consumer Spending Slows

CEO Carol Tomé Addresses Labor Talks
UPS van
UPS Inc.

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UPS Inc. reported first-quarter earnings that were lower than those the Atlanta-based company posted in the same period in 2022 and were mixed when it came to Wall Street expectations.

UPS reported a quarterly income decline of nearly 23% to $2.55 billion, or $2.20 a share, compared with $3.30 billion, $3.05, in the same period a year ago.

However, the results beat Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of $2.19 per share.

UPS reported year-over-year revenue fell 6% to $22.93 billion compared with $24.3 billion in 2022. That narrowly missed analysts’ expectations, which according to Zacks were expecting UPS to generate $22.94 billion.



UPS said the year-over-year decline in both revenue and income were the result of sagging consumer spending that pushed fewer packages through its U.S. and international networks.

“In the first quarter, deceleration in U.S. retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia. In response, we focused on controlling what we could control and delivered first-quarter consolidated operating profit and operating margin in line with our base case targets,” CEO Carol Tomé said. “Given current macro conditions, we expect volume to remain under pressure. We will remain focused on driving productivity while investing in efficiency and growth initiatives, enabling us to come out of this demand cycle even stronger.”

UPS said its volume declines were steepest in its U.S. express shipments, with next-day air shipments falling 10.7% and its deferred services shipments slumping 24.5% from the first quarter of 2022.

UPS said it made up some of the difference with higher pricing, as average revenue per domestic package increased nearly 5% from last year.

The U.S. Commerce Department reported that retail sales fell in both February and March, one of several signs that higher interest rates are slowing the economy.

On a conference call with reporters and analysts after the financial report was released, Tomé said U.S. volumes held up better than the company expected in January, but deteriorated in March. She said consumers began to spend more on food and groceries and less on goods that UPS helps deliver. In 2022, UPS said it delivered a global average of 28 million packages a day for businesses and consumers alike.


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Company officials also gave an update on the status of contract talks between UPS and the International Brotherhood of Teamsters, which represents more than 330,000 employees at UPS, the vast majority of them drivers. Thirteen supplemental negotiations are taking place around the country and national negotiations began April 17 on a five-year deal.

“Good progress has been made on many of our local, supplemental agreements,” Tomé said. “We are aligned on several key issues, like solving the staffing needs for weekend deliveries and ways to mitigate the summer heat in our package delivery vehicles. While we expect to hear a great deal of noise during the negotiations, I remain confident that a win, win, win contract is very achievable and that UPS and the Teamsters will reach an agreement by the end of July.”

The current national contract expires July 31 and the Teamsters have publicly pledged to go on strike if a deal is not reached at the end of this contract cycle.

At the bargaining table, the Teamsters have said they want higher wages, more manageable work shifts, a resolution of pay differences and work conditions for Monday-through-Friday drivers compared with those who work on weekends, and improved safety conditions.

“We will win faster when the uncertainty is behind us, I am quite convinced of the Teamster negotiations. Customers are saying we’d like to ship with you, we’re gonna sit on the sidelines until you’re done,” Tomé said. “So we just need to get done and we will.”

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UPS also released guidance for the remainder of the year. UPS said it expects its results to be at the low end of its prior guidance with yearly revenue to be at about $97 billion, from the prior guidance range of $97 billion to $99.2 billion. Operating profit margin is expected to be about 12.8%, from a prior range of 12.8% to 13.6%.

Wall Street projects full-year operating profit margins to be at 13.2%, which is in the middle of management’s prior range. That’s down slightly from the 13.8% reported in 2022.

UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 4 on the TT Top 100 list of the largest logistics companies.