United Parcel Service, Inc., a package delivery and logistics provider, offers transportation and delivery services.
United Parcel Service (UPS), a holding in our US Value portfolio, delivered a better-than-expected first quarter result this week, offering some reassurance to investors despite the challenging economic backdrop. While earnings topped expectations, the company opted not to reaffirm its full-year outlook, citing continued macroeconomic uncertainty—an increasingly common theme among global businesses.
For the March quarter, UPS reported adjusted earnings per share of USD 1.49, comfortably ahead of the consensus forecast of USD 1.40. This compares favourably to the USD 1.43 figure from the same period last year. Revenue was broadly in line at USD 21.5 billion, down just 0.9% year-on-year but slightly above forecasts.
Growth was driven by both US and international package delivery operations. Domestic parcel revenue rose 1.6% to USD 14.46 billion, while international revenue improved by 2.7% to USD 4.37 billion. However, its Supply Chain Solutions segment fell 16%, reflecting ongoing pressure in that area of the business.
Despite the solid result, UPS shares were muted, initially rising 1.8% before giving back gains. Investors appeared cautious about the company’s near-term trajectory, particularly with UPS choosing not to reaffirm its 2025 targets and instead offering only a modest second-quarter outlook. Management expects Q2 revenue of around USD 21 billion and an adjusted operating margin of 9.3%, slightly below market expectations.
A key story behind the scenes is UPS’s decision to reduce its exposure to lower-margin Amazon deliveries. This pivot has prompted a major network overhaul, including the planned closure of 73 facilities and a reduction of 20,000 jobs. These changes, while disruptive in the short term, are aimed at sharpening UPS’s profitability and enabling a leaner, more tech-driven operation. Cost savings are expected to reach USD 3.5 billion by 2025.
Looking ahead, UPS is repositioning itself for a future beyond e-commerce bulk shipping. The company recently announced a USD 1.6 billion acquisition in healthcare logistics, aiming to lift healthcare-related revenue to USD 20 billion by 2026—a strategic shift toward higher-margin, specialised logistics services.
For investors, this result highlights the resilience of UPS’s core business, even as global trade tensions and cost pressures linger. While the lack of updated guidance may keep some on the sidelines, the long-term story remains one of operational efficiency, margin improvement, and a more diversified earnings base.
