UPS Boeing 767-300 freighter

UPS Boeing 767-300 freighter

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Shares in express giant UPS fell today after the company revealed plans to offload 50% of its business with its largest customer Amazon when announcing fourth-quarter results.

The company reported a 1.5% year-on-year increase in fourth-quarter revenues to $25.3bn, while operating profit improved by 18.1% to $2.9bn and net income was up 7.2% to $1.7bn.

However, for the full year, revenues were up just 0.1% to $91.1bn, operating profit was down 7.4% to $8.5bn and net income declined 13.8% to $5.8bn.

The company also announced a series of measures to improve profitability.

First, it has reached an agreement in principle with its largest customer (Amazon) to lower its volume by more than 50% by the second half of 2026.

Second, effective 1 January, the company has insourced 100% of its UPS SurePost product where it partnered with the US Postal Service on deliveries.

And third, in connection with these efforts, the company is reconfiguring its US network, and launching multi-year “efficiency reimagined” initiatives to create $1bn in savings through an “end-to-end process redesign”.

The company also announced its outlook for the year, with revenues expected to fall to $89bn.

“We are making business and operational changes that, along with the foundational changes we’ve already made, will put us further down the path to becoming a more profitable, agile and differentiated UPS that is growing in the best parts of the market,” said UPS chief executive Carol Tomé.

During the fourth quarter, the company also logged a total charge of $639m, of a pension charge of $506m, transformation strategy costs of $73 million, asset impairment charges of $46m and $14m related to the withdrawal from a multiemployer pension plan.

Following the announcement of the results, UPS shares had fallen by more than 20% by 10.30am.

Looking at fourth-quarter segment performance, the domestic US segment saw revenues increase 2.2% year on year to $17.3bn and operating profits were up 16.1% to $1.7bn.

Improvements were driven by a 2.4% increase in revenue per piece and increases in air cargo.

The international segment saw revenues increase 6.9% to $4.9bn and operating profit was up 14.5% to $1bn.

The revenue increase was on the back of an 8.8% increase in daily volumes.

Finally, the supply chain solutions business reported a 9.1% decrease in revenues to $3.1bn but operating profits were up 62.6% to $226m.

Results were due to a reduction in revenue following the divestiture of trucking firm Coyote, partially offset by growth in air and ocean forwarding.