UPS electric vehicle delivery van on December 2, 2022 in London, UK.
Mike Kemp | In pictures | Getty Images
United Parcel Service reported fourth-quarter revenue on Tuesday that fell short of Wall Street expectations and was down from a year ago, as the company continues to see lower volume amid falling request.
Here’s how UPS fared in the fourth quarter, relative to what Wall Street had expected, based on an average of analyst estimates compiled by Refinitiv:
- Adjusted earnings per share: $3.62 versus $3.59.
- Total income: $27.03 billion vs. $28.09 billion.
For the three months ended Dec. 31, the company reported adjusted net income of $3.15 billion, or $3.62 per share, compared with $3.15 billion, or $3.59 per share. , one year earlier.
The company on Tuesday offered a full-year forecast that fell short of analysts’ expectations. It projects revenue between $97 billion and $99.4 billion, against analyst estimates of $99.98 billion.
Since taking the reins in 2020, CEO Carol Tomé has championed a “Better not Bigger” business strategy, focusing on high-margin shipments rather than simply increasing volume. This strategy was put to the test in the last quarter, as lower volumes weighed on revenues.
In the fourth quarter, revenue from UPS’s domestic segment, which accounts for about two-thirds of the company’s revenue and most of its business-to-consumer transactions, rose 3%. International shipping revenue fell 8%, due to volume reductions and a slowdown in demand in China.
Its supply chain business saw revenue fall 18% with lower volume in its freight forwarding business, although this was partially offset by its healthcare segment.
UPS shares edged higher on weak premarket trading volume.
High prices have been a boon to the company’s margins as volumes plummet and costs rise. UPS and rival fedex increased shipping rates by 6.9% at the end of 2022. In the last quarter, UPS also announced that it would reduce its capital expenditure by $500 million, for example by leasing rather than by buying certain locations.
UPS also on Tuesday forecast an adjusted operating margin of between 12.8% and 13.6% for the year. The company expects capital spending to be around $5.3 billion, after tightening spending to $5 billion last year.
Shares of the shipping company have fallen more than 10% in 2022 as consumer spending adjusts to inflation and declines from pandemic highs.