UPS Inc. early Tuesday came in with weaker than expected first-quarter results as U.S. retail sales fell more than the company expected and it faced ongoing demand weakness in Asia.
Revenue was reported at $22.9 billion, down 6% from the same period a year ago. Consolidated operating profit was $2.5 billion, down 21.8% compared to the first quarter of 2022, and down 22.8% on an adjusted basis. Diluted earnings per share were $2.19 for the quarter; adjusted diluted earnings per share of $2.20 were 27.9% below the same period in 2022 and roughly in line with analysts’ median estimates.
UPS (NYSE: UPS) CEO Carol Tomé said in a statement that the company expects volumes to remain under pressure given current macroconditions.
Shares were off nearly $17 in Tuesday morning trading.
The domestic segment, the company’s largest, reported $14.98 billion in revenue, down from $15.1 billion in the 2022 quarter. Adjusted operating profit fell to $1.48 billion from $1.7 billion. Average daily volume fell by 5.4%.
International revenue fell to $4.54 billion from $4.87 billion, while operating profit declined to $806 million from $1.2 billion. Average daily volume dropped 6.2% year over year.
The company’s Supply Chain Solutions got hit by weakness in international forwarding rates and volumes, which were partially offset by growth in its health care business. Revenue dropped 22.5%.
In January, UPS provided a range of full-year financial targets based on the macroeconomic forecasts at that time. During the quarter, the global environment worsened due to challenging macroconditions and change in consumer behavior. Because of that, UPS expects full-year revenue and adjusted operating margin targets to be at the low end of prior guidance.
The updated guidance has revenue of about $97 billion and consolidated operating margin of around 12.8%.