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UPS Shares Slide 9.9% as Company Missed Analysts’ Expectations on Both Earnings and Revenue in Q1 2023
United Parcel Service Inc (NYSE: UPS) shares closed Tuesday’s market trading at $176.29, down 9.99 percent from the day’s opening price. The sudden decline was directly attributed to the UPS first quarter (Q1 2023) earnings results released on April 25. During the first three months of 2023, United Parcel Service reported consolidated revenues of $22.9 billion, a 6 percent decline from the first quarter of 2022. Additionally, the company missed Wall Street analysts’ expectations of $23.01 in revenue for the first quarter of 2023.
According to the company, the decline in retail sales in March and other changes in spending behavior significantly affected the first quarter earnings.
“In the first quarter, deceleration in US retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia ..…. Given current macro conditions, we expect volume to remain under pressure. We will remain focused on driving productivity while investing in efficiency and growth initiatives, enabling us to come out of this demand cycle even stronger,” Carol Tomé, UPS chief executive officer, noted.
Closer Look at UPS Financial Q1 2023 Statement
For Q1 2023, UPS reported adjusted earnings per share (EPS) of about $2.20, whereas analysts expected the company to report an EPS of $2.21. Additionally, the company noted that its adjusted consolidated operating profit came in at $2.6 billion. The company’s United States domestic segment reported a revenue of about $14.98 billion during the first quarter, compared to $15.1 billion during the same time last year.
For the international segment, UPS reported revenue of $4.543 billion during the first quarter of 2023 compared to $4.87 billion reported last year at the same time. The company’s supply chain solution reported an adjusted first-quarter revenue of $3.395 billion, a decline of 22.5 percent due to volume declines.
In its earnings report, UPS provided its full-year financial targets that were advised by changing macroeconomic aspects. For the full year, the company anticipates reporting a consolidated revenue of around $97 billion. Additionally, the company announced that it expects dividend payments, which are subject to the board’s approval, of about $5.4 billion. For the full year, the company announced it expects to conduct a share repurchase program of about $3 billion.
“The company provides certain guidance on an adjusted (non-GAAP) basis because it is not possible to predict or provide a reconciliation reflecting the impact of future pension adjustments or other unanticipated events, which would be included in reported (GAAP) results and could be material,” the company noted.
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