Shares of United Parcel Service Inc. (UPS) dropped 5% toward a three-year low in premarket trading Thursday. This follows the package delivery giant’s report of third-quarter profit expectations that were higher than anticipated. However, the company missed on revenue and subsequently cut its full-year outlook. These disappointing results are attributed to a slowing economy and negative effects of labor negotiations.
In comparison to the year-ago period, UPS recorded a significant decline in net income. Net income fell from $2.58 billion ($2.96 per share) to $1.13 billion ($1.31 per share). After excluding nonrecurring items, adjusted earnings per share of $1.57 were reported, surpassing the FactSet consensus of $1.52.
UPS experienced a 12.8% decrease in revenue, with total revenue amounting to $21.1 billion. This result fell below the FactSet consensus of $21.40 billion. Specifically, domestic package revenue declined by 11.1% to $13.66 billion, missing expectations of $13.74 billion. International package revenue also decreased by 11.1% to $4.27 billion, while supply-chain and freight revenue experienced a significant decline of 21.4% to $3.13 billion.
Full-Year Outlook Adjustment
Considering the challenges faced during the third quarter, UPS has revised its outlook for the full year of 2023. The company now expects revenue to be between $91.3 billion and $92.3 billion, down from the previously projected $93 billion.
The stock performance of UPS has not fared well in recent months. Over the past three months through Wednesday, the stock has tumbled by 20.3%. This decline is more substantial compared to the Dow Jones Transportation Average‘s decrease of 16.4% and the Dow Jones Industrial Average‘s decline of 7.0%.