(Reuters) -United Parcel Service cut its 2023 revenue forecast due to lower e-commerce delivery demand as it fights to win back customers lost during its tumultuous labor talks, sending its shares down 5.3% before the bell on Thursday.
The Atlanta company is caught in a profit squeeze in the wake of contract talks with its Teamsters-represented workforce.
The world’s biggest package delivery firm now expects full-year revenue between $91.3 billion and $92.3 billion, compared with a prior forecast of about $93 billion.
UPS also cut its annual adjusted operating margin to between 10.8% and 11.3% compared to prior forecast of about 11.8%.
The entire industry is fighting for market share as demand from e-commerce delivery weakens. Reuters reported earlier this month that UPS and its rivals for the first time in years have been using discounts and other incentives to maintain and win market share.
“While unfavorable macro-economic conditions negatively impacted global demand in the quarter, our U.S. labor contract was fully ratified in early September and volume that diverted during our labor negotiations is starting to return to our network,” UPS chief Carol Tomé said in a statement.
UPS, often seen as a bellwether for the U.S. economy, and other logistics companies have been racing to match costs to global demand that has fallen back to pre-pandemic levels.
UPS has been cutting jobs and leaning on technology to help offset falling e-commerce demand, weak export and industrial production and the cost hit from its new labor contract.
On Thursday, the company posted an adjusted profit per share of $1.57 in the quarter through September compared with the analysts’ average estimate of $1.52, as per LSEG data.
(Reporting by Priyamvada C and Lisa Baertlein; Editing by Arun Koyyur)
