UPS plans to cut 12,000 management jobs to save $1bn and boost operating margins in coming years
United Parcel Service Inc. (UPS) reported earnings that fell short of Wall Street’s estimates due to wage inflation and weak package demand, as reported by BNN Bloomberg.
Before regular trading in New York, UPS shares dropped 6.3 percent at 6:08 am The stock has decreased by 7.7 percent this year through Monday’s close.
These results highlight the difficulties posed by higher labour costs in a period of reduced demand after the pandemic-induced boom in e-commerce deliveries. The Atlanta-based company indicated that expenses would be front-loaded in the new Teamsters union contract agreed upon about a year ago.
In response to these challenges, UPS has sought to cut costs and focus on increasing its operating margin. In January, the company unveiled a plan to save $1bn by eliminating 12,000 management positions.
Chief Executive Officer Carol Tomé acknowledged the expected decline in operating profit in Tuesday’s statement but pointed out that package volume had increased for the first time in nine quarters. She described this as “a significant turning point for our company.”
UPS adjusted its full-year revenue guidance to $93bn, down from a previous estimate of up to $94.5bn. The company also reinstated its share buyback program, aiming to repurchase around $1bn annually.
