United Parcel Service Inc. (NYSE: UPS posted second-quarter results Tuesday that beat revenue expectations but narrowly missed the consensus earnings estimate, as the shipping giant continues to navigate a complex global trade environment.
The Atlanta-based logistics giant posted adjusted earnings per share of $1.55, narrowly missing the consensus estimate of $1.57. Revenue was $21.2 billion, beating the expected $20.87 billion.
Operating profit for the quarter totaled $1.8 billion, or $1.9 billion on an adjusted basis. The adjusted consolidated operating margin rose to 8.8%, up from 8.2% in the first quarter.
In the U.S. Domestic segment, revenue fell 0.8% year over year to $14.08 billion, driven by lower package volumes. The adjusted operating margin remained steady at 7% compared to last year’s quarter.
The International segment generated $4.49 billion in revenue, up 2.6% from a year ago, fueled by a 3.9% increase in average daily volume. However, the adjusted operating margin fell to 15.2%, down from 18.9% a year earlier.
Supply Chain Solutions revenue dropped 18.3% to $2.65 billion, mainly due to the prior-year divestiture of freight brokerage unit Coyote. Still, the segment’s adjusted operating margin improved to 8%, from 7.5% in the second quarter of 2024.
For the first half of 2025, UPS reported operating cash flow of $2.67 billion and free cash flow of $742 million.
The company reported a 6.1% increase in GAAP cost per piece to $12.18, or $12.12 on an adjusted basis, up 5.6% year over year. U.S. daily volume declined to 16.6 million packages.
“We are making meaningful progress on our strategic initiatives,” said CEO Carol Tomé, praising UPS employees for navigating a “dynamic and evolving trade environment.”
The company is undergoing a multi-year transformation effort to streamline its operations and cost structure. Transformation 2.0, Fit to Serve, and Network Reconfiguration programs include workforce reductions, technology upgrades, and facility closures. UPS expects to save $3.5 billion through these initiatives in 2025, with $400 million to $650 million in related expenses.
During the earnings conference call, the CEO of UPS highlighted several key factors impacting the company’s performance. A significant point of discussion was the China to U.S. trade lane, which UPS is actively monitoring. The CEO noted that a year-over-year drop in average daily volume in this lane was directly attributed to the increased tariffs and the elimination of de minimis exceptions.
Source link
