Air Freight News

UPS drops most in seven months as margin outlook comes up short

United Parcel Service Inc. fell the most in seven months after the courier forecast profit margins that fell shy of expectations.

U.S. domestic adjusted operating margins will be between 10.5% and 12% in 2023, the company said Wednesday as it outlined it’s three-year financial plan. Investors had been expecting about 13%, according to analysts who surveyed shareholders before the presentation.

UPS didn’t provide an earnings forecast or offer a cost-cutting plan, which also weighed on the stock.

The shares dropped 5.5% to $198.26 at 11:27 a.m. in New York after tumbling as much as 6.1%, the most intraday since Oct. 28. UPS had gained 25% this year through Tuesday while the S&P 500 rose 13%.

Chief Executive Officer Carol Tome, who assumed her role a year ago, has adopted a “better not bigger” strategy to drive margins higher. The Atlanta-based company is using new technologies to win over small customers that tend to pay full price for delivery while larger clients often command discounts.

Bloomberg
Bloomberg

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© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

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