UPS electric van on September 13, 2023 in Cirencester, United Kingdom.
Mike Kemp | In pictures | Getty Images
United Parcel Service on Tuesday reported second-quarter earnings that beat Wall Street expectations and raised its full-year outlook.
The delivery giant’s shares fell in premarket trading.
Here’s how the company fared in the second quarter compared to Wall Street expectations, based on a survey of analysts by LSEG:
- Earnings per share: $1.76 adjusted vs. $1.66 expected
- income: $22.8 billion vs. $21.81 billion expected
For the quarter ended June 30, UPS reported net income of $604 million, or 71 cents per share, down significantly from $1.28 billion, or $1.51 per share, in the same period last year. Adjusted for one-time items, the company reported earnings of $1.5 billion, or $1.76 per share.
Tune in at 10 a.m. ET when UPS CEO Carol Thome joins CNBC TV to discuss earnings. Watch in real time on CNBC+ or CNBC Pro stream.
The company also raised full-year 2026 guidance, expecting consolidated revenue of $91.2 billion and adjusted diluted earnings per share of approximately $7.22 per share.
CEO Carol Thome said on a call with analysts on Tuesday that it was “the fourth quarter in a row where results exceeded our expectations.”
“Going forward, our number one priority remains moving the right packages and the right mix of volumes through our network,” she added.
Company executives said on the call that they expect domestic average daily volume to fall to the mid-single digits in the third quarter due to the seasonal downturn and the impact of the company’s decline in Amazon. UPS also expects revenue to remain flat from last year.
UPS is in the midst of a turnaround strategy aimed at positioning the company for long-term and sustainable growth. The company is focused on increasing automation in its networks and entering growth markets, including logistics of health care.
Thome said on a call with analysts that healthcare generated more than $3 billion in revenue for the second straight quarter.
“We are the only carrier that provides end-to-end integrated healthcare solutions using our own assets, providing complete control, visibility and best-in-class service,” she said.
In the second quarter, UPS reported a 6% increase in domestic revenue driven by an increase in unit revenue and a 12.5% increase in international revenue. Supply chain solutions revenue rose 7.8%, driven in part by growth in healthcare logistics.
The company added that it has received approximately US$1.2 billion from the network reconfiguration program and plans to reach US$3 billion by the end of the year.
On a call with analysts, Thome said the company successfully completed its divestment from Amazon, eliminating about 2 million units a day of “lower quality Amazon” and removing about $4.5 billion in related costs.
“We now have a leaner, more automated and flexible network that will provide operational leverage as volume grows,” she said.
She also added that the company is investing in RFID and artificial intelligence to improve its tracking capabilities, which she says is “the most significant advancement in package visibility in ten years.”
Thome said UPS is “seeing momentum” on the China-US route, which she said has returned to year-over-year growth since May.
“Going into the second half of the year, we have gained momentum despite external factors that may affect our results, such as the war and volatile fuel prices,” she said.