UPS earnings Q4 2022

UPS electric vehicle delivery van on 2nd December 2022 in London, United Kingdom.

Mike Kemp | In Pictures | Getty Images

United Parcel Service on Tuesday reported fourth-quarter revenue that missed Wall Street’s expectations and declined from last year, as the company continues to see volume fall amid cooling demand.

Here’s how UPS performed in the fourth quarter, compared with what Wall Street anticipated, based on an average of analysts’ estimates compiled by Refinitiv:

  • Adjusted earnings per share: $3.62 vs $3.59.
  • Total revenue: $27.03 billion vs $28.09 billion.

For the three-month period 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, a year earlier.

The company on Tuesday offered full-year guidance that fell below analyst’s expectations. It is projecting revenue between $97 billion and $99.4 billion, versus analysts’ estimates of $99.98 billion.

Since taking the helm in 2020, CEO Carol Tomé has been championing a “Better not Bigger” business strategy, focusing on high-margin shipments rather than just boosting volume. That strategy was put to the test last quarter as volume declines weighed on revenue.

In the fourth quarter, revenue for UPS’ domestic segment, which makes up about two-thirds of the company’s revenue and most of its business-to-consumer transactions, grew 3%. Revenue from international shipping decreased 8%, due to volume reductions and softening demand in China.

Its supply chain business saw revenue dip 18% with volume decreasing in its freight forwarding business, though it was partially offset by its health-care segment.

Shares of UPS rose 1.6% in premarket trading.

Elevated prices have been a boon for the company’s margins as volumes sag and costs rise. UPS and rival FedEx raised shipping rates by 6.9% at the end of 2022. Last quarter, UPS also announced it would cut $500 million in capital expenditures by, for example, leasing rather than buying certain locations.

UPS on Tuesday also forecast adjusted operating margin of between 12.8% and 13.6% for the year. The company expects capital expenditures to come in at about $5.3 billion, after tightening spending to $5 billion last year.

The shipping company’s shares fell over 10% in 2022 as consumer spending adjusted to inflation and came down from Covid pandemic highs.

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