UPS posts lower Q1 profit as it scales down Amazon deliveries

[ATLANTA] United Parcel Service (UPS) posted a drop in first-quarter adjusted profit as the parcel giant has been cutting its exposure to low-margin, high-volume shipments from customers such as Amazon.

However, its move to focus more on higher-margin shipments enabled it to keep its full-year revenue forecast.

Over the last year, UPS has cut thousands of jobs, as it ramps up automation at sorting hubs – in a bid to bring down operating costs.

The strategic shift comes as US logistics companies have been under pressure in the past year from changing trade policies.

This includes the loss of duty-free de minimis treatment for low-value e-commerce shipments tied to China-linked discounted sellers such as Shein and Temu.

UPS CEO Carol Tome said the company will return to revenue and profit growth from the second quarter due to its transition to higher-paying shipments and the cost cuts it undertook in recent quarters.

The company maintained its forecast of a 1.2 per cent rise in 2026 revenue to US$89.7 billion and an adjusted operating margin of about 9.6 per cent.

Still, shares of UPS were down 2.9 per cent in premarket trading.

Evercore ISI analyst Jonathan Chappell wrote in a note that the lack of further details from UPS on its second-quarter forecast and a margin miss at the company’s US domestic segment, the company’s top revenue driver, “is likely to be viewed unfavourably”.

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Atlanta-based UPS reported adjusted net income of US$1.07 a share for the three months ended Mar 31, compared with US$1.49 a share from the year-ago period, the data compiled by the London Stock Exchange Group showed.

This beat analysts’ expectations of US$1.02.

Quarterly revenue at the world’s largest parcel delivery company also dropped 1.6 per cent to US$21.2 billion. REUTERS