United Parcel Service Inc. (UPS) has unveiled plans to cut 12,000 jobs and provided a revenue outlook for 2024 that fell short of Wall Street’s expectations, causing a sharp decline in its shares at the opening bell.
During a conference call on Tuesday morning, UPS CEO Carol Tome indicated that the company may explore the possibility of selling its Coyote truck load brokerage business. The decision to reduce the workforce is expected to result in $1 billion in cost savings for UPS.
In September, the Teamsters approved a tentative contract agreement with UPS, concluding contentious labor negotiations that had the potential to disrupt package deliveries for millions of businesses and households across the nation.
Tome emphasized the need to align the organization with its strategic goals and allocate resources to focus on crucial objectives. Additionally, UPS announced an increase of 1 cent in its quarterly dividend to shareholders of record on Feb. 20.
In a bid to streamline operations, UPS has mandated that employees return to the office five days a week in the coming year.
UPS anticipates 2024 revenue to fall in the range of approximately $92 billion to $94.5 billion, a figure below Wall Street’s expectations, which had forecasted a number exceeding $95.5 billion. Consequently, UPS shares plummeted nearly 9% on Tuesday.
The fourth quarter of 2023 saw a 7.8% decline in revenue to $24.92 billion, slightly missing Wall Street projections of $25.31 billion. Profits for the quarter ending in December dipped by over half to $1.61 billion, or $1.87 per share, from $3.45 billion, or $3.96 per share. On an adjusted basis, quarterly earnings per share reached $2.47, surpassing the average estimate by a penny, according to FactSet.