[LOS ANGELES] United Parcel Service’s first-quarter profit beat market estimates and the parcel delivery giant said it will cut 20,000 jobs to lower costs in an uncertain economy and in anticipation of weak volumes from its largest customer, Amazon.
Shares of the company rose nearly 2 per cent before the bell on Tuesday (Apr 29) after it said it expects to save US$3.5 billion in 2025 from jobs cuts and by shutting 73 leased and owned buildings by the end of June.
Extensive tariffs by US President Donald Trump have slowed down trade and led companies to reduce costs in anticipation of a demand hit. For parcel delivery firms, the slowdown is likely to reduce the need for shipping services between companies.
“The actions we are taking to reconfigure our network and reduce cost across our business could not be timelier,” CEO Carol Tome said.
UPS said it was not providing any updates to its full-year outlook due to the economic uncertainty even as it lowers costs through jobs cuts, warehouse closures, increased automation and asset sales.
“The removal of 2025 guidance will likely create a wide range of outcomes that may be difficult to underwrite without greater macro clarity,” Evercore ISI analyst Jonathan Chappell said.
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The company last year said it cut its workforce by 12,000 jobs. It expects expenses between US$400 million to US$600 million during 2025, related to separation benefits and lease related costs.
The Atlanta-based parcel delivery firm in January warned that it was accelerating its plan to slash millions of deliveries for its largest customer, Amazon.com, which accounted for 11.8 per cent of its overall revenue in 2024. UPS also faces a sharp downturn in volume from China-linked bargain e-commerce sellers Temu and Shein after the US decided that starting May two it will collect tariffs on goods that was duty-free up to US$800 per individual sale.
UPS’ first-quarter revenue fell marginally to US$21.5 billion but beat Wall Street expectations of US$21.05 billion, according to data compiled by LSEG.
Its US domestic segment revenue grew 1.4 per cent to US$14.46 billion in the first quarter, driven by increase in air cargo and improving revenue per piece, even as volumes declined.
UPS posted an adjusted profit per share of US$1.49 compared with expectations of US$1.38.
The world’s largest package delivery firm had in January forecast full-year revenue of US$89 billion and operating margin of about 10.8 per cent. REUTERS
