UPS forecasts 2026 revenue above estimates on cost cuts, margin growth
Reuters
Published Mar 26, 2024 06:13AM ET
Updated Mar 26, 2024 02:17PM ET
By Kannaki Deka
(Reuters) -United Parcel Service forecast 2026 total revenue above estimates on Tuesday, as the world's largest parcel delivery company unveiled a three-year plan prioritizing high-margin parcels and aggressive cost-cutting.
Shares of the company still dropped 8.2% in afternoon trade.
"The shares were down ... suggesting 2026 guidance was slightly worse than investor expectations (including anticipated capital spending) or the market is questioning that outlook," Morningstar analyst Matthew Young said in a note.
Following a post-pandemic slowdown in e-commerce demand, the package delivery firm intends to lean on its healthcare logistics segment and small- and medium business customers to drive volume and margin growth.
"After coming off a difficult market in 2023, the small package industry is poised to return to growth in 2024 and beyond," UPS CEO Carol Tomé said on Tuesday.
Over the next three years, the company expects to spend about $6 billion on its plan, dubbed "Network of the Future", to further automate its facilities and using robotics to bag and sort packages.
"This will enable us to reduce our reliance on labor and drive the productivity flywheel, which should translate into about $3 billion in savings over 5 years with half of that by 2026," UPS CFO Brian Newman said.
Earlier this year, UPS had forecast 2024 revenue below Wall Street's target amid weak demand from its retail, manufacturing and high tech customers.
The company forecast 2026 revenue between $108 billion and $114 billion, above LSEG estimates of $102.12 billion. It expects to reach a consolidated adjusted operating margin growth of 13% by 2026.
Atlanta-based UPS said it expects total capital expenditures from 2024 to 2026 to be between $17 billion and $18 billion, about 5.5% of total revenue.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.