(Bloomberg) -- United Parcel Service Inc. reported profit short of Wall Street’s estimates as the courier faces pressure from wage inflation and soft package demand.
Adjusted second-quarter earnings were US$1.79 per share, the parcel giant said Tuesday in a statement. Analysts had predicted $1.98 a share on average, according to estimates compiled by Bloomberg. Revenue was also short of expectations.
The results highlight the challenges from higher labour costs in an environment of weakened demand following a pandemic-driven boom in e-commerce deliveries. The Atlanta-based company has said the expenses would be front-loaded in the new Teamsters union contract, agreed to about a year ago.
UPS shares fell 6.3 per cent as of 6:08 a.m. before regular trading in New York. The stock declined 7.7 per cent this year through Monday’s close.
The courier has sought to reduce spending while focusing on growing operating margin in the coming years. UPS revealed a plan in January to save $1 billion by cutting 12,000 management jobs.
Chief Executive Officer Carol Tomé said in Tuesday’s statement that the company had anticipated a decline in operating profit but noted that volume had turned positive for the first time in nine quarters, which she called “a significant turning point for our company.”
UPS narrowed its revenue guidance for the full year to $93 billion from a prior forecast of as much as $94.5 billion. The company also restarted a share buyback program targeting around $1 billion annually.
©2024 Bloomberg L.P.