UPS reports earnings miss and cuts guidance.

• On Thursday, United Parcel Service reported lower-than-expected profit and revenue for the second quarter.
• The company cut its 2024 revenue guidance to approximately $93 billion, down from a previous forecast of up to $94.5 billion.
• The global freight recession is being attributed to weak freight demand and soft pricing in the shipping sector.

On Thursday, the company reported lower-than-expected profit and revenue for the second quarter, and reduced its 2024 revenue guidance. As a result, shares fell 7% in premarket trading.

UPS has revised its 2024 revenue forecast from a previous estimate of up to $94.5 billion to approximately $93 billion. Meanwhile, the company's full-year capital expenditures are now expected to be around $4 billion, down from the previous forecast of $4.5 billion.

In addition to its target of $500 million in share repurchases in 2024, the company also made an announcement.

UPS stated that the guidance does not take into account the effects of the sale of its trucking business Coyote Logistics to RXO Logistics, which is expected to be completed by the end of the year, according to a previous press release from UPS.

Additionally, the company has recently agreed to acquire the Mexican express delivery company Estafeta as part of its ongoing expansion efforts.

Based on a survey of analysts by LSEG, how did the shipping giant perform in the quarter ended June 30 compared to Wall Street's expectations?

• Earnings per share: $1.79 cents adjusted vs. $1.99 expected
• Revenue: $21.8 billion vs. $22.18 billion expected

UPS reported earnings of $1.79 per share after adjusting for an international regulatory matter, while its reported net income for the quarter was $1.41 billion, or $1.65 cents per share, compared with $2.08 billion, or $2.42 per share, a year earlier.

The company's operating profit decreased from $2.78 billion to $1.94 billion year over year.

"UPS CEO Carol Tomé stated in the company's earnings release that the third quarter of 2024 marked a significant turning point for the company as it experienced volume growth in the U.S. for the first time in nine quarters. Despite an expected decline in operating profit in the first half of 2024 compared to the previous year, the company anticipates a return to operating profit growth in the future."

The company's revenue decreased to $21.82 billion from $22.06 billion the previous year, primarily due to declines in its domestic and international segments.

UPS reported a 1.9% decrease in revenue in its U.S. operation, while its international segment experienced a 1% decrease in revenue due to a 2.9% decrease in average daily volume.

The supply chain solutions segment of the company experienced a 2.6% increase in revenue compared to the previous year, mainly due to the expansion of logistics, particularly in healthcare.

UPS earnings were closely watched by investors to gauge the improvement in demand amidst weak freight demand and soft pricing in the shipping sector, which some have referred to as a global freight recession.

The United States Postal Service has awarded UPS an air cargo contract, making UPS its primary provider starting September 30, replacing FedEx.

Although the financial details of the deal were previously undisclosed, UPS referred to the award as "significant" in an April press release. The deal brought in $1.75 billion to FedEx in fiscal 2023, that company said.