UNITED Parcel Service (UPS) has revised its annual profit projection due to increased expenses resulting from a new labour contract with the union and reduced demand for its package services, reports Bloomberg.
In a statement, ups reported adjusted earnings of US$1.57 per share, marking a 47 per cent decline compared to the previous year.
Analysts had initially expected earnings of $1.52 per share, but they revised their estimates downward by 40 cents to account for the impact of the new labour agreement, which took effect on August 1.
UPS also noted a 13 per cent decrease in sales, amounting to $21.1 billion.
'While unfavourable macro-economic conditions negatively impacted global demand in the quarter, our US labour contract was fully ratified in early September, and volume that diverted during our labour negotiations is starting to return to our network,' said UPS chief executive Carol Tome.
Based in Atlanta, the company has adjusted its 2023 forecast once more, now projecting an adjusted operating profit margin ranging from 10.8 per cent to 11.3 per cent and sales within the range of $91.3 million to $92.3 million.
This adjustment comes after an earlier reduction of the 2023 outlook by Ms Tome in August, when she lowered the operating margin target to 11.8 per cent and also revised the annual sales goal.
In premarket trading in New York, UPS shares declined by as much as 7.9 per cent.
Year-to-date, the stock had already experienced a 15 per cent decrease as of Wednesday's closing.
The substantial cost associated with UPS' new labour contract with the Teamsters is notably concentrated in the first year, with 46 per cent of the cost incurred during this period, thus affecting the company's profit margins.
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In a statement, ups reported adjusted earnings of US$1.57 per share, marking a 47 per cent decline compared to the previous year.
Analysts had initially expected earnings of $1.52 per share, but they revised their estimates downward by 40 cents to account for the impact of the new labour agreement, which took effect on August 1.
UPS also noted a 13 per cent decrease in sales, amounting to $21.1 billion.
'While unfavourable macro-economic conditions negatively impacted global demand in the quarter, our US labour contract was fully ratified in early September, and volume that diverted during our labour negotiations is starting to return to our network,' said UPS chief executive Carol Tome.
Based in Atlanta, the company has adjusted its 2023 forecast once more, now projecting an adjusted operating profit margin ranging from 10.8 per cent to 11.3 per cent and sales within the range of $91.3 million to $92.3 million.
This adjustment comes after an earlier reduction of the 2023 outlook by Ms Tome in August, when she lowered the operating margin target to 11.8 per cent and also revised the annual sales goal.
In premarket trading in New York, UPS shares declined by as much as 7.9 per cent.
Year-to-date, the stock had already experienced a 15 per cent decrease as of Wednesday's closing.
The substantial cost associated with UPS' new labour contract with the Teamsters is notably concentrated in the first year, with 46 per cent of the cost incurred during this period, thus affecting the company's profit margins.
SeaNews Turkey