United Parcel Service (UPS) raised its revenue forecast for 2026 to $91.2 billion, up from $89.7 billion, following a successful reduction in Amazon-related deliveries. The company reported second-quarter revenue of $22.8 billion, a 7.6% increase year-over-year, surpassing Wall Street's estimate of $21.81 billion, according to Benzinga.
Key Details
CEO Carol Tomé attributed the improved performance to the completion of an 18-month plan to reduce low-margin deliveries for Amazon, which had previously accounted for 8.8% of UPS's business. This figure has dropped from a peak of over 13%. Tomé stated,
I want to thank all UPSers for their extraordinary work… as we successfully completed our Amazon glide down and related network reconfiguration initiatives as designed.
Despite the positive revenue outlook, UPS shares fell nearly 7% to $105.56 amid investor skepticism. The company also reported a decline in GAAP diluted earnings per share (EPS) to 71 cents from $1.51, while adjusted EPS rose to $1.76, exceeding the $1.66 estimate. UPS's net income decreased to $604 million from $1.28 billion, impacted by $891 million in after-tax transformation charges related to employee separation costs.
Background
The U.S. Domestic segment saw revenue rise by 6% to $14.93 billion, driven by a 9.3% increase in revenue per package. However, average daily volume fell to 16 million packages from 16.55 million, with adjusted costs per piece rising to $13.09.
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UPS's forecast revision may influence investor sentiment in the logistics sector, particularly affecting shares of competitors like FedEx, which fell 1.6%. The adjustments reflect ongoing challenges in shipping volumes and margins, particularly in light of tariffs affecting cross-border shipments. Watch for UPS's upcoming earnings report in the third quarter to gauge the sustainability of this growth amid changing market dynamics.