United Parcel Service lifted annual revenue and profit forecasts and posted second-quarter results above Wall Street estimates on Tuesday as it returned to growth on domestic demand strength after a planned volume pullback in Amazon.com. The world’s largest parcel delivery company, widely viewed as a barometer of global economic activity due to its exposure to a broad range of industries, has been consolidating its footprint by closing facilities and cutting jobs as it seeks to streamline operations and generate US$3 billion in cost savings by 2026. “We successfully completed our Amazon glide down and related network reconfiguration initiatives as designed,” CEO Carol Tome said. The company had previously said it would accelerate a plan to slash millions of low-profit deliveries for the online retailer, its largest customer and a growing delivery rival, calling the business “extraordinarily dilutive” to margins. In April, the firm said Amazon represented 8.8 per cent of its business at the end of the first quarter, a sharp decline from a peak contribution of more than 13 per cent. UPS expects to generate revenue of US$91.2 billion in 2026, up from its previous forecast of US$89.7 billion. It now expects full-year adjusted earnings of US$7.22 per share. UPS’ U.S. domestic adjusted operating margin was 8 per cent in the second quarter, while its international segment reported a margin of 12.4 per cent, highlighting significantly higher profitability in the company’s overseas business. “If margin upside continues at U.S. Domestic, investors may gain confidence that the cost realignment associated with the now-completed Amazon glide-down is tracking ahead of plan, which will be viewed positively,” said Evercore ISI analyst Jonathan Chappell. Shares of UPS were up 1.1 per cent in premarket trading. Rival FedEx’s FDX.N shares also rose and were 0.9 per cent higher. Atlanta, Georgia-basedUPS reported adjusted operating profit of US$2.10 billion. It posted adjusted profit per share of US$1.76 for the quarter ended June 30. Analysts on average expected the company to report adjusted profit of US$1.66 per share, according to data compiled by LSEG. It reported second-quarter consolidated revenue of US$22.83 billion, compared with analysts’ estimate of US$21.81 billion. UPS benefited from fuel surcharges that insulated margins from higher energy costs, while stronger package volumes helped drive higher yields and support quarterly performance. The company has previously warned that sustained fuel-price inflation could weaken consumer spending in the U.S., reducing demand for shipments across its network. (Reporting by Lisa Baertlein in Los Angeles and Abhinav Parmar in Bengaluru; Editing by Pooja Desai)
