New York
CNN
—
UPS reported a sharp drop in revenue and profit in the second quarter. The company also cut its profit forecast, expecting narrower margins in the wake of its tentative deal with the Teamsters union.
Shares of UPS
(UPS) fell nearly 4% in premarket trading following the report.
UPS reported adjusted income of $2.2 billion in the quarter, down 24% from a year earlier, though slightly better than estimates of analysts surveyed by Refinitiv. Revenue fell 11% to $22.1 billion.
The company also trimmed its full-year revenue outlook by $4 billion to $93 billion. UPS said it lost business during its labor negotiations and online purchases have been weaker. It also said its full-year profit margin will be 1% lower than its previous guidance, partly due to the cost of the labor deal with the union.
Some of the decline in shipment volumes came before shippers started shifting away from UPS in July after talks broke down. It took nearly three weeks for the two sides to return to the table, and many customers shifted their business to rival carriers to protect themselves from the risk of a strike.
UPS said its domestic package volume was down 10% in the second quarter, while international shipments were off nearly 7%. The company had already warned three months ago that it expected lower volumes this year due to a softening economy.
Despite the lower revenue and earnings guidance, the company said it expects to stick with its plan to pay $5.4 billion in dividends and repurchases of $3 billion in shares.
The company reached a tentative deal with the Teamsters on July 25, just ahead of an August 1 strike deadline. The 340,000 members of the union who work at the company are now voting on whether or not to ratify the deal. Vote results are expected on August 22.
