UPS shares dive on plans to scale back Amazon deliveries
By Benjamin Chiou
Date: Thursday 30 Jan 2025
(Sharecast News) - Shares in UPS tanked on Thursday after the delivery giant announced it is planning to lower volumes with its largest customer, Amazon.com, by at least a half by the end of next year.
The company beat profit forecasts comfortably with its fourth-quarter earnings, but shares were down 15% at $113.76 by 0940 in New York, as investors focused on the future outlook.
UPS said it had reached an agreement in principle with Amazon.com to lower its volume by more than 50% by the second half of 2026, as it launches a multi-year $1bn cost-savings programme through an "end-to-end process redesign".
Operational and business model changes, such as this move to reduce its reliance on lower-margin shipments, will "put us further down the path to becoming a more profitable, agile and differentiated UPS that is growing in the best parts of the market", according to chief executive Carol Tomé.
The outlook also included guidance for revenues to be $89bn this year, down from $91.1bn in 2024. While the 2024 result was more or less in line with expectations, analysts had pencilled in around $95bn in sales for 2025.
For the fourth quarter, revenues grew 1.5% year-on-year to $25.3bn, just short of the $25.4bn consensus forecast, though 11.3% adjusted earnings per share growth to $2.75 smashed the $2.53 estimate.
"I want to thank all UPSers for their hard work and efforts as we closed out 2024 with an outstanding peak, delivering best-in-class service and strong financial results ahead of our targets for the quarter," Tomé said.
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