UPS Q4 2022 Earnings

The UPS electric vehicle will be delivered in London, UK on December 2, 2022.

Mike Kemp | Image | Getty Images

UPS Fourth-quarter revenue reported Tuesday morning missed Wall Street expectations and was down from last year, as the company continued to lose sales amid cooling demand.

Here’s how UPS performed in the fourth quarter compared to Wall Street expectations, according to the average analyst estimate compiled by Refinitiv:

  • Adjusted earnings per share: $3.62 vs. $3.59.
  • Total revenue: $27.03 billion vs. $28.09 billion.

For the three-month period ended December 3. On Sept. 31, the company reported adjusted net income of $3.15 billion, or $3.62 a share, compared with $3.15 billion, or $3.59 a share, a year earlier.

The company’s full-year guidance on Tuesday fell short of analysts’ expectations. It expected revenue between $97.0 billion and $99.4 billion, compared with analysts’ estimates of $99.98 billion.

Since taking the helm in 2020, Chief Executive Carol Tomé has championed a “better not bigger” business strategy that focuses on high-margin shipments rather than just boosting sales. That strategy was tested last quarter as lower volumes weighed on revenue.

Revenue in UPS’s domestic unit, which accounts for about two-thirds of the company’s revenue and the bulk of business-to-consumer transactions, rose 3% in the fourth quarter. International shipping revenues fell 8% due to lower volumes and weak demand in China.

Revenue in its supply chain business fell 18%, and volumes in its freight forwarding business fell, although it was partially offset by its healthcare segment.

Shares of UPS edged higher on low volume in premarket trading.

With weak volumes and rising costs, higher prices are good for the company’s margins. UPS and competitors fedex UPS hiked shipping rates by 6.9% at the end of 2022. Last quarter, UPS also announced it would cut $500 million in capital spending, for example, by leasing certain locations rather than buying them.

UPS also forecast on Tuesday that its adjusted operating margin will be between 12.8% and 13.6% this year. The company expects capital expenditures of about $5.3 billion after tightening spending last year to $5 billion.

Shares of the shipping company are down more than 10% in 2022 as consumer spending adjusts for inflation and retreats from pandemic highs.

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