UPS to cut 12,000 jobs 5 months after reaching union deal as revenue outlook for year disappoints

MICHELLE CHAPMAN, Associated Press

Updated: Jan 30, 2024 / 02:45 PM CST

FILE – A United Parcel Service truck is parked on a street, in New York, Thursday, May 11, 2023. Shares of UPS are falling before the market open on Tuesday, Jan. 30, 2024, as the package delivery company gave a weaker-than-expected full-year revenue forecast. (AP Photo/Richard Drew, File)

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UPS will cut 12,000 jobs and released a revenue outlook for this year that sent its shares down sharply.

The company also hinted that its Coyote truck load brokerage business may be put up for sale. UPS acquired the Chicago-based company for $1.8 billion in 2015.

The Teamsters in September voted to approve a tentative contract agreement with UPS, putting a final seal on contentious labor negotiations that threatened to disrupt package deliveries for millions of businesses and households nationwide. The contract includes pay raises for full- and part-time union workers, the creation of 7,500 full-time jobs and the filling of 22,500 open positions, allowing more part-timers to transition to full-time.

On a conference call Tuesday morning, CEO Carol Tome said that by reducing the company’s headcount UPS will realize $1 billion in cost savings. The job eliminations are anticipated to be among management roles and contractors, the company said.

UPS also said Tuesday that its board approved an increase of 1 cent in its quarterly dividend to shareholders of record Feb. 20.

“We are going to fit our organization to our strategy and align our resources against what’s widely important,” Tome said.

Tome said that UPS is ordering employees to return to the office five days a week this year.

United Parcel Service Inc. anticipates 2024 revenue in a range of approximately $92 billion to $94.5 billion, short of Wall Street’s expectations for a figure above $95.5 billion.

Shares of UPS dropped nearly 8% on Tuesday.

Revenue also came up short in the fourth quarter, sliding 7.8% to $24.92 billion. That’s just shy of Wall Street projections for $25.31 billion, according to a poll of analysts by FactSet.

Profits for the quarter ended in December slid by more than half to $1.61 billion, or $1.87 per share, from $3.45 billion, or $3.96 per share. On an adjusted basis, quarterly earnings per share totaled $2.47, a penny above the average estimate, according to FactSet.