United Parcel Service (UPS) has reported mixed first-quarter financial results as demand for shipments of small packages softens.
The Atlanta-based shipping and logistics giant reported earnings per share (EPS) of $1.43 U.S., which beat Wall Street forecasts of $1.30 U.S.
However, revenue in Q1 amounted to $21.70 billion U.S., which was below estimates of $21.80 billion U.S., according to data from FactSet.
The company reported a 3.2% decline in average daily shipping volumes in its domestic segment and a 5.8% decrease in its international unit.
UPS said that cost controls undertaken in Q1 partly offset subdued demand for small package delivery.
In January, the company announced 12,000 job cuts, a move that will save it $1 billion U.S. this year, as demand normalizes following a shipping boom during the Covid-19 pandemic.
UPS is also grappling with a new labor contract with the Teamsters union that has hurt its margins. The company said it is absorbing 46% of the wage and benefit costs of the new five-year labour agreement in 2024.
To offset the lower shipping volumes, UPS is focusing on high-margin businesses such as small and medium-sized enterprises and healthcare companies, where revenue hit $10 billion U.S. for the first time in 2023.
UPS is also working to grow its market share, having recently secured a contract to provide Priority Mail and other quick delivery services for the U.S. Postal Service.
Over the last 12 months, the stock of UPS has declined 26% to trade at $145.36 U.S. per share.
