UPS Withholds Earnings Guidance Amid Market Volatility, Revenue Drops 2.8%

United Parcel Service (UPS) has declined to provide earnings guidance for the second consecutive quarter, citing difficulties in navigating market volatility and the challenges of business transformation. The company reported second-quarter revenue of $21.2 billion, a 2.8% year-over-year decrease, which exceeded market expectations. However, its non-GAAP earnings per share of $1.55 fell short of the anticipated $1.57.

UPS attributed its decision to withhold full-year revenue and operating profit forecasts to the current macroeconomic uncertainty. The company only provided limited predictions for its 2025 capital expenditures and dividend payments, reiterating its expectation that the ongoing transformation plan will achieve $3.5 billion in cost savings.

This lack of clarity in outlook suggests that a recovery remains distant, continuing the operational uncertainty that has plagued the company since it stopped updating previous forecasts in April. While many companies initially paused earnings guidance due to market volatility, some have since resumed providing forecasts.

UPS is striving to regain its pre-pandemic business levels, as stay-at-home consumers shifted to online shopping during the height of the pandemic. However, the company continues to face declining business due to weak demand across the economy and the threat of union strikes, which has led some customers to switch to competitors.

Under the leadership of CEO Carol Tome, UPS is grappling with fundamental issues, including an excess of unprofitable business volume and a high-cost structure. The company reported adjusted earnings per share of $1.55 for the second quarter, slightly below the average analyst estimate of $1.56. Package delivery revenue reached $14.08 billion, surpassing expectations.

To address these challenges, UPS is reducing its reliance on Amazon, which accounted for 11.8% of its total revenue last year. The company is shifting towards more profitable freight services. As part of its transformation efforts, UPS is closing and integrating facilities, advancing automation, and reducing its workforce. Earlier this month, the company offered voluntary separation agreements to full-time union drivers, including compensation of $1,800 per year of service and a minimum payout of $10,000.

This buyout plan reflects UPS's significant transition. After more than a century of continuous growth, the company is now attempting to streamline its delivery network and workforce. The company's decision to forgo earnings guidance highlights the complexities and uncertainties it faces in its transformation journey. As UPS navigates these challenges, its ability to adapt and innovate will be crucial in determining its future success.