- UPS did not provide full-year revenue and margin forecasts
- Q2 revenue beats estimates, profit marginally misses
- International strength offsets weak US performance
July 29 (Reuters) - United Parcel Service posted quarterly profit marginally below estimates on Tuesday and again declined to issue annual revenue and margin forecasts, deepening concerns that changing U.S. trade policy is weighing on the delivery giant.
Shares in the world's largest parcel delivery firm fell 3% to $98.51, after executives said UPS will accelerate its plan to deliver fewer packages for Amazon.com, its largest customer.
UPS and rival FedEx are seen as bellwethers for the health of the global economy as they serve clients across industries and geographies.
U.S. trade policy, which has frozen corporate decision-making and driven consumer sentiment to new lows, has hurt the small package delivery business that UPS dominates as it moves into planning for the vital peak winter holiday season.
Tariffs on China and the elimination of duty-free treatment on purchases from China-linked e-retailers like Temu and Shein contributed to the 34.8% drop in average daily volume during May and June. The China to U.S. trade lane is UPS' most profitable.
"Peak plans have not yet been submitted by our customers, which is an indication that they too are having difficulty in forecasting demand for the holiday selling season," CEO Carol Tome said on a conference call with analysts.
UPS reported an adjusted consolidated operating margin of 8.8% for the quarter, while U.S. domestic adjusted operating margin was 7% - below the 10%-plus that analysts and investors had come to expect.
The company did not provide an annual revenue or operating profit outlook for a second straight quarter, citing ongoing macroeconomic uncertainty. In its last forecast, issued in January, UPS projected 2025 revenue of $89 billion.
In a hit to demand, the White House in May began collecting tariffs on shipments under $800 from China that were previously duty-free, though the "de minimis" levies were later reduced to 54% from 120% as part of a trade truce.
Analysts at J.P. Morgan have previously noted that negative impact from the removal of the de minimis exemption seems to impact UPS more than FedEx.
Atlanta-based UPS reported consolidated revenues of $21.2 billion, above Wall Street estimates of $20.86 billion, helped by strength in its international segment, as importers likely rushed to front-load finished goods to reduce the impact of the tariff changes.
However, revenue in its largest U.S. segment fell to $14.08 billion from $14.20 billion, pressured by a sluggish recovery in retail sales and industrial activity.
The company reported adjusted net income of $1.55 per share for the quarter ended June 30, below estimates of $1.56 per share, according to data compiled by LSEG.
UPS has been shuttering hundreds of facilities and slashing thousands of jobs as part of a sweeping overhaul, its largest ever, aimed at generating $3.5 billion in cost savings in 2025.
In April, the company announced plans to cut 20,000 jobs due to the shedding of half its shipping volume from Amazon.com, its largest customer.
UPS in July said it was offering voluntary buyouts to its unionized full-time drivers for the first time.
Reporting by Abhinav Parmar in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Devika Syamnath and Deepa Babington
Source: Reuters