UPS reported its fourth-quarter earnings, falling short of Wall Street’s revenue estimates. The company experienced declines in shipping volume both internationally and domestically. CEO Carol Tomé stated that 2023 was a challenging year, marked by declines in volume, revenue, and operating profits across all three business segments. As part of an effort to align resources in 2024, UPS announced 12,000 layoffs, which are expected to save the company about $1 billion in costs.
For the last quarter of 2023, UPS reported net income of $1.61 billion, or $1.87 per share, compared to $3.45 billion, or $3.96 per share, in the same period the previous year. Adjusted earnings were $2.47 per share, slightly exceeding the expected $2.46 per share. However, revenue declined by 7.8% to $24.9 billion, missing the expected $25.43 billion.
The company reported a 7.4% drop in average daily volume domestically and an 8.3% decrease internationally. Tomé attributed the international softness to challenges in Europe, freight complications in the Red Sea region, and issues with the Panama and Suez Canals.
Despite not directly mentioning the financial impact of negotiations with Teamsters in August over labor contracts, Tomé acknowledged the negotiations and the broader macroeconomic environment as contributors to the disappointing performance in 2023.
UPS is also considering selling its Coyote truck brokerage business, characterized as a “highly cyclical” business with “considerable earnings volatility.” Additionally, the company plans to ask workers to return to the office five days a week in 2024.
The 2024 outlook for UPS anticipates revenue in the range of $92 billion to $94.5 billion, with an adjusted operating margin of about 10% to 10.6%.