UPS reports 12,000 job cuts due to decreased package volume in the last quarter.

• Wall Street revenue estimates for UPS were not met on Tuesday, as the company reported declines in shipping volume, both domestically and internationally.
• As part of an effort to align resources, the company also announced 12,000 layoffs in 2024.
• UPS anticipates its revenue to fall between $92 billion and $94.5 billion in 2024.

Wall Street revenue estimates were not met by the company on Tuesday, as reported in its fourth-quarter earnings, due to decreases in shipping volume, both domestically and internationally. Additionally, the company announced 12,000 layoffs as part of a plan to align resources in 2024.

CEO Carol Tomé stated on a company earnings call that the workforce reductions would result in approximately $1 billion in cost savings for the company.

2023 was a challenging year with declines in volume, revenue, and operating profits across all three business segments, as Tomé candidly stated.

Shares of the package giant dipped more than 8%.

Here’s how the company performed compared to Wall Street estimates:

• LSEG, formerly known as Refinitiv, expects adjusted earnings of $2.47 per share, which is higher than the $2.46 per share expected.
• Revenue: $24.92 billion vs. $25.43 billion expected

In the last three months of 2023, UPS reported a net income of $1.61 billion, or $1.87 per share, which was lower than the $3.45 billion, or $3.96 per share, earned in the same period a year earlier. However, after adjusting for one-time items related to pensions and intangible assets, UPS earned $2.47 per share.

Last year, revenue was $27 billion, but it decreased by 7.8% to $24.9 billion this year.

The company experienced a 7.4% decline in average daily volume domestically and an 8.3% decrease internationally. Tomé stated that the international softness was mainly due to Europe, where there were freight issues in the Red Sea region and complications in the Panama and Suez canals.

The earnings report did not mention any direct financial effects from negotiations with the Teamsters in August over labor contracts, but Tomé attributed the "disappointing" year to both the talks and the broader macroeconomic environment.

The company is considering selling its Coyote truck brokerage business, which is highly cyclical and has considerable earnings volatility. Additionally, the CEO announced that the company plans to ask workers to return to the office five days a week in 2024.

UPS anticipates revenue to fall between $92 billion and $94.5 billion in 2024, with an adjusted operating margin of approximately 10% to 10.6%.