(Bloomberg) – United Parcel Service Inc. Plondée shares after the company has provided annual income much lower than expectations, indicating to investors that a long -awaited rebound in demand for its package services will not arrive this year and the ‘inciting to reduce its weak business with Amazon.com Inc.
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UPS’s basic package operations have been extended to demand, as the package volumes fell from peaks from the pandemic era. Some customers have also negotiated bonus services to economic services, reducing the benefits of the company based in Atlanta.
It aims to adapt by shipping less upper margin packages and reducing less profitable deliveries. UPS said Thursday that it had entered into an agreement with Amazon to reduce volumes by more than 50% by the second half of 2026.
“Amazon is our greatest client, but it is not our most profitable client,” CEO Carol Tomé told Investors during a call conference.
Amazon confirmed that he would ship less package with UPS, even if the online retailer had initially asked to ship more by mail. “We will continue to join them and many other carriers to serve our customers,” said Amazon spokesman Kelly Nantel in a statement sent by e-mail.
UPS provides for a turnover of $ 89 billion for 2025, against the average wait for analysts of $ 94.9 billion. He said that the revenues of 2024 came to $ 91.1 billion. Business with Amazon represented 11.8% of this total.
The rapid development of UPS activities with Amazon was a surprise, said Daniel Imbro, analyst at Stephens Inc.
“This corresponds to their better, no bigger strategy,” said Iri by e-mail. “But it seems to be a wind from profits, given the lack of growth in underlying income.”
UPS shares have dropped from 18% to $ 109.92 at 11:13 am in New York, the most steep intra-e-ie since October 10, 2008. This has followed a decline of 20% in 2024, which marked a third year of decline. Amazon dropped 1.8% to $ 232.71.
Tomé’s troubled mandate
UPS actions have lost half of their value since the beginning of 2022 and are close to where they exchanged when Tomé took office as CEO in June 2020 at the beginning of the cobed epidemic. After driving a peak in home delivery request at the start of his mandate, UPS suffered from the drop in higher margins and costs. Tomé also deals with the repercussions of the generous UPS agreement with his union in 2023, which increased its labor costs and forced the company to reduce its profit prospects.
Rival Fedex Corp., who has seen his fortune hovering in the past two years after undergoing his own restructuring, has been much faster to reduce his dependence on Amazon lower profits.
Tomé told anxious analysts on the call according to which UPS will soon provide an overview of his prospects for 2026.
“We will find a moment to do this this year. Perhaps at the end of the first quarter, “she said.
UPS tried to counter the slowdown in shipping volumes by reducing costs where it can. The company is closing certain facilities in the United States and renovating others to make way for automation that could help save labor costs in the future. In 2024, UPS permanently closed 11 installations and carried out 49 operational closures, the company said in a presentation.
The financial director, Brian Dykes, declared on the call of investors that the UPS would close up to 10% of his buildings, would reduce the size of the fleet and cut his workforce in the United States by a non-number Specified in accordance with lean volumes.
Tightening plans of the belt
UPS also provides a multi -year overhaul of its network to go after $ 1 billion in savings. The expensive contract with Teamsters Union led the company to seek means to compensate for this burden, partly by winning customers who fled with rival carriers in the middle of rocky labor negotiations in 2023.
In addition, UPS has aggressively increased prices and implemented supplements. Simultaneously, he goes after higher margin activities by expanding his health care and targeting $ 20 billion in revenue in the segment by 2026.
The adjusted benefit of the fourth quarter reached $ 2.75 per share, projections of analysts above average for $ 2.53 per share, according to estimates compiled by Bloomberg. The pace was motivated by a higher demand and prices during the rush to the expedition of the end of year holidays.
Low package request is a black cloud.
“It is difficult to glean what really happened from the point of view of efficiency without the volumes being really there, because it is just this perpetual waiting game,” said Conor Cunningham, analyst at Melius Research, in an interview. “I feel like I wrote the same note. It’s been just several years like: “When will it end?” »»
(Updates of the fifth paragraph with an Amazon instruction; adds a background everywhere)
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