UPS reported its fourth-quarter earnings, falling short of Wall Street revenue estimates. The company experienced drops in shipping volume both internationally and domestically during the quarter. UPS announced workforce reductions of 12,000 employees as part of its efforts to align resources in 2024. These layoffs are expected to save the company approximately $1 billion in costs.
In 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, during the same period a year earlier. Adjusting for one-time items related to pensions and intangible assets, UPS earned $2.47 per share. Revenue saw a decline of 7.8% to $24.9 billion from $27 billion in the previous year.
The company reported a 7.4% drop in average daily volume domestically and an 8.3% decrease internationally. The international softness was particularly notable in Europe, coupled with freight complications in the Red Sea region, as well as the Panama and Suez Canals.
UPS CEO Carol Tomé acknowledged the challenging and disappointing year in 2023, with declines in volume, revenue, and operating profits across all three business segments. Although the earnings report did not explicitly mention financial impacts from negotiations with Teamsters in August over labor contracts, Tomé cited the negotiations and the broader macroeconomic environment as contributors to the disappointing year.
Additionally, UPS is exploring the possibility of selling its Coyote truck brokerage business, which Tomé described as a “highly cyclical” business with “considerable earnings volatility.” The company is also planning to ask workers to return to the office five days a week in 2024.
Looking ahead, UPS provided a 2024 outlook, expecting revenue to range from $92 billion to $94.5 billion, with an adjusted operating margin of about 10% to 10.6%.