United Parcel Service recently reported their second-quarter profit and revenue, which fell short of expectations. The company also decided to adjust their 2024 revenue guidance, now expecting it to be around $93 billion, a decrease from the initial forecast of $94.5 billion. Additionally, the company announced a decrease in full-year capital expenditures, now expected to be around $4 billion instead of $4.5 billion.
In the quarterly report, UPS revealed that they had missed the mark in terms of earnings per share and revenue when compared to Wall Street expectations. Earnings per share were reported at $1.79, falling short of the anticipated $1.99. Revenue for the quarter was $21.8 billion, missing the estimated $22.18 billion.
The company also reported that their operating profit had declined to $1.94 billion, down from $2.78 billion in the same period last year. UPS attributed the decline in revenue to changes in their product mix, resulting in a 1.9% decrease in revenue for their U.S. operations. The international segment also experienced a revenue drop of 1%, mainly due to a 2.9% decrease in average daily volume.
Despite the disappointing financial results, UPS has been making strategic moves to expand its international presence. The company recently announced the acquisition of Mexican express delivery company Estafeta, as part of its efforts to grow globally. Additionally, UPS is targeting around $500 million in share repurchases in 2024, showing confidence in its long-term strategy.
The weak freight demand and soft pricing in the shipping sector have been causing concerns in the industry, leading some to refer to it as a global freight recession. Investors were closely monitoring UPS’s earnings report to gauge whether there were any signs of improvement in demand. The company’s recent air cargo contract with the United States Postal Service, taking over from rival FedEx, was seen as a positive development.
UPS CEO, Carol Tomé, remained optimistic about the company’s future despite the challenging quarter. She highlighted the return to volume growth in the U.S. as a positive sign for the company. Tomé acknowledged the decline in operating profit in the first half of 2024 but expressed confidence in returning to operating profit growth in the future.
The report of United Parcel Service’s second-quarter performance reflects a mixed bag of results. While the company faced revenue shortfalls and had to revise its guidance, it remains committed to its long-term vision of growth and expansion. With strategic acquisitions and plans for share repurchases, UPS is positioning itself for future success in the competitive shipping industry.