UPS predicts revenue for 2026 to exceed expectations due to cost reductions and increased margins, according to Reuters.

UPS predicts revenue for 2026 to exceed expectations due to cost reductions and increased margins, according to Reuters.

By Kannaki Deka

(Reuters) – United Parcel Service forecast 2026 total revenue above estimates on Tuesday, as the world’s largest parcel delivery company unveiled a three-year plan prioritizing high-margin parcels and discount aggressive costs.

The company’s shares fell another 8.2% in afternoon trading.

“Stocks were down…suggesting that the 2026 forecast was slightly worse than investor expectations (including planned capital spending) or that the market is questioning that outlook,” said Matthew Young, Morningstar analyst, in a note.

Following a post-pandemic slowdown in e-commerce demand, the parcel delivery company intends to leverage its healthcare logistics segment and small and mid-sized business customers to drive business growth. volumes and margins.

“After experiencing a challenging market in 2023, the small package industry is poised to return to growth in 2024 and beyond,” UPS CEO Carol Tomé said Tuesday.

Over the next three years, the company plans to spend about $6 billion on its plan, dubbed “Future Grid,” to further automate its facilities and use robotics to pack and sort packages.

“This will allow us to reduce our dependence on labor and boost productivity, which is expected to result in approximately $3 billion in savings over 5 years, half of which by 2026 ” said Brian Newman, chief financial officer of UPS.

Earlier this year, UPS forecast 2024 revenue below Wall Street’s target amid weak demand from its retail, manufacturing and high-end customers. technology.

The company forecast 2026 revenue of between $108 billion and $114 billion, above LSEG estimates of $102.12 billion. It plans to achieve consolidated adjusted operating margin growth of 13% by 2026.

Atlanta-based UPS said it expects total capital spending from 2024 to 2026 to be between $17 billion and $18 billion, or about 5.5% of total revenue.



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