UPS cuts Amazon -Exposure in HIT to 2025 forecasts, stocks slip

On By Littum

By Abhinav Parmar

(Reuters) -Nunited Parcel Service Thursday expected disappointing revenue 2025, when it cuts back deliveries to its largest customer, Amazon, in an already challenging environment for the package delivery giant.

Shares of UPS fell approx. 13% in the trade in Premarket after the company without naming Amazon said it had reached an agreement with its “largest customer” to cut transported quantities by more than 50% in the second half of next year.

The move surprised some analysts and comes in a difficult period for UPS as the company is struggling with sustained weakness in packages’ demand for pandemics and a flooding of low-profile shipments from negotiators of negotiations such as TEMU and Shein.

Amazon and its affiliated companies accounted for approx. 11.8% of UPS’s total revenue in 2023.

“The deal with Amazon to reduce quantities by more than 50% in 18 months is a surprise and acceleration of slip down by this business that has long represented a tail risk,” Evercore ISI analyst Jonathan Chappell said in a note.

Still, UPS said that carrying less shipping to Amazon will eventually increase its revenue per day. Piece.

“We are making business and operational changes that, along with the fundamental changes we have already made, will set us further down the road to becoming a more profitable, agile and differentiated UPS,” said CEO Carol Tome.

The package delivery giant said it configured its US network and launched perennial efficiency initiatives that would result in savings of about $ 1 billion.

UPS expected 2025 revenue of $ 89 billion compared to analysts’ average estimation of $ 94.88 billion, according to data prepared by LSEG.

It also predicts consolidated operating marginal with the whole year by 10.8%, an increase from 9.8%, it reported for 2024.

Turnover of the fourth quarter of $ 25.3 billion lost estimates of $ 25.42 billion.

UPS reported an adjusted profit of $ 2.75 per Share for the quarter, which ended December 31, and beat estimates of $ 2.53 per year.

(Reporting Abhinav Parmar in Bengaluru and Lisa Baertlein in Los Angeles; Editing Shounak Dasgupta and Devika Syamnath)