United Parcel Service (UPS) demonstrated impressive third-quarter financial results, significantly exceeding Wall Street’s expectations and highlighting its ongoing efforts to reshape the company through substantial job cuts and operational changes. Shares of UPS surged over 7% in afternoon trading following the announcement.
For the quarter ending September 30, UPS reported earnings of $1.31 billion, or $1.55 per share, compared to $1.99 billion, or $1.80 per share, during the same period last year. After excluding one-time costs, adjusted earnings stood at $1.74 per share, surpassing the $1.31 per share forecast by analysts surveyed by Zacks Investment Research. In terms of revenue, UPS generated $21.42 billion, outpacing Wall Street’s expectation of $20.84 billion.
To achieve these results, UPS has implemented a significant restructuring plan, which includes approximately 34,000 job cuts in operational roles and the closure of daily operations at 93 buildings in the first nine months of 2023. Furthermore, the company previously revealed intentions to cut about 14,000 positions, primarily in management, and is still in the process of identifying additional facilities for closure.
Earlier this year, UPS laid out a plan to eliminate around 20,000 jobs and close over 70 facilities amid a drastic reduction in Amazon shipments, its largest client. In April, the company disclosed aspirations to close 73 leased and owned buildings by mid-year while continuing to analyze its network for further closures.
In January, UPS solidified a deal with Amazon, agreeing to decrease shipment volume by more than 50% by the latter half of 2026. CEO Carol Tomé emphasized during the company’s fourth-quarter earnings call that after nearly three decades of partnership, it was essential for UPS to reassess its relationship with Amazon when its contract came up for renewal this year.
As part of its cost-cutting measures, UPS has realized savings of approximately $2.2 billion as of September 30 and projects to achieve total year-over-year savings of $3.5 billion by 2025. This proactive approach reflects UPS’s commitment to navigating challenging market conditions while pursuing profitability and efficiency.