LOS ANGELES, July 28 (Reuters) – United Parcel Service raised its annual revenue forecast and posted second-quarter results above Wall Street estimates on Tuesday after a planned pullback in Amazon.com volumes as a promised return to year-over-year growth materialized.
The world’s largest parcel delivery company, widely viewed as a barometer of global economic activity due to its exposure to a broad range of industries, has been consolidating its footprint by closing facilities and cutting jobs as it seeks to streamline operations and generate $3 billion in cost savings by 2026.
“We successfully completed our Amazon glide down and related network reconfiguration initiatives as designed,” CEO Carol Tome said.
In April, the firm said Amazon represented 8.8% of its business at the end of the first quarter, a sharp decline from a peak contribution of more than 13%.
UPS expects to generate revenue of $91.2 billion in 2026, up from its previous forecast of $89.7 billion. It now expects full-year adjusted earnings of $7.22 per share.
UPS’ U.S. Domestic adjusted operating margin was 8% in the second quarter, while its International segment reported a margin of 12.4%, highlighting significantly higher profitability in the company’s overseas business.
Rival FedEx in June reported a drop in margins in its core delivery segment from a year earlier.
UPS and FedEx have been grappling with weaker shipment volumes as U.S. tariffs and the elimination of the “de minimis” exemption for low-value imports curtailed e-commerce flows from China-linked retailers such as Shein and Temu.
The policy changes have weighed on delivery demand, prompting UPS to focus on rebuilding profitability and stabilizing volumes.
The company reported adjusted operating profit of $2.10 billion. It posted adjusted profit per share of $1.76, for the quarter ended June 30.
Analysts on average expected the company to report adjusted profit of $1.66 per share, according to data compiled by LSEG.
It reported second-quarter consolidated revenue of $22.83 billion, compared with analysts’ estimate of $21.81 billion.
UPS benefited from fuel surcharges that insulated margins from higher energy costs, while stronger package volumes helped drive higher yields and support quarterly performance.
The company has previously warned that sustained fuel-price inflation could weaken consumer spending in the U.S., reducing demand for shipments across its network.
(Reporting by Lisa Baertlein in Los Angeles and Abhinav Parmar in Bengaluru; Editing by Pooja Desai)
