Global shipping company UPS said Tuesday that the U.S. economy is slowing down as its revenue fell 6 percent in the first quarter compared to a year earlier.
The company’s operating profit, it said, also fell about 22 percent. Its earnings also fell short of Wall Street forecasts for the quarter, according to Reuters.
“In the first quarter, deceleration in U.S. retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia,” said the Atlanta-based firm in an earnings statement. “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.”
Shares of rival FedEx Corp fell 3 percent, while trucking firms J.B. Hunt Transport, and Old Dominion Freight Line Inc. slipped between about 1 percent and 3 percent. Most delivery firms are struggling with a bloated delivery capacity as online sales that had peaked during the pandemic started to fizzle as high inflation dented discretionary spending.
“U.S. discretionary sales are lagging grocery and consumable sales, and disposable income is shifting away from goods to services,” CEO Carol Tomé said during a conference call with analysts, Reuters reported.
Shares of UPS fell 9.26 percent as of Tuesday afternoon and were set for the worst day since early 2015 if losses held, after the company also forecast full-year revenue of about $97 billion, at the lower end of its prior forecast of $97 billion to $99.4 billion, compared with analysts’ estimates of $98.14 billion. UPS reported an adjusted profit of $2.20 per share in the first quarter, compared with analysts’ average estimate of $2.21.
Besides a slowing-down economy, the company is also involved in contract negotiations with the Teamsters, a union that represents 340,000 UPS employees in the United States, according to the union. The company has an
