UPS 2023 revenue expectations drop following tentative union deal
Revenue declined at UPS in the second quarter, according to the Associated Press. The package delivery company lowered its full-year revenue expectations by $4 billion, primarily due to a tentative labor contract reached late last month with its 340,000 unionized workers.
Package volume, however, has been in decline for all shippers and fell again for UPS during the quarter. Shares slid more than 5% before the market opened today.
UPS reached a tentative deal with the International Brotherhood of Teamsters, potentially averting a strike that threatened to disrupt package deliveries for millions of businesses and households nationwide.
Under the agreement, which still needs to be approved by union members, full- and part-time union workers will get $2.75 more per hour in 2023 and $7.50 more by the end of the five-year contract. The deal includes a provision to increase starting pay for part-time workers — whom the union says are the most at risk of exploitation — from $16.20 per hour to $21 per hour. The average pay for part-timers had been $20. Voting on the new contract begins Aug. 3 and concludes Aug. 22.
UPS earned $2.08 billion, or $2.42 per share, for the three months ended June 30. Adjusted earnings were $2.54 per share, which beat the $2.51 per share that analysts surveyed by Zacks Investment Research were looking for.
Revenue declined to $22.06 billion from $24.77 billion, missing Wall Street’s estimate of $22.88 billion. Revenue for the domestic and international segments fell as average daily volume dropped. UPS said that it now foresees 2023 consolidated revenue of about $93 billion. Its prior forecast was for revenue of around $97 billion.