April 28 (Reuters) – United Parcel Service on Tuesday reiterated its full-year revenue target despite projecting a return to growth in the June quarter, as soaring fuel prices from the U.S. and Israeli war in Iran could threaten an underlying improvement in its business. “It is early in the year and there is a war […]
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UPS keeps full-year revenue target, says fuel price spike from Iran war could hurt demand
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April 28 (Reuters) – United Parcel Service on Tuesday reiterated its full-year revenue target despite projecting a return to growth in the June quarter, as soaring fuel prices from the U.S. and Israeli war in Iran could threaten an underlying improvement in its business.
“It is early in the year and there is a war in the Middle East. High gasoline prices could potentially impact demand towards the end of the year,” CEO Carol Tome said on an earnings call. UPS charges customers a fuel surcharge to offset cost increases, a move that protects its profits from price spikes.
The world’s largest parcel delivery firm maintained its forecast of a 1.2% rise in 2026 revenue to $89.7 billion and an adjusted operating margin of about 9.6%.
Shares of the company were down 5.1% in early trading.
U.S. logistics firms including UPS and rival FedEx have been facing pressure over the past year from changing trade policies, notably the loss of duty-free “de minimis” treatment for low-value e-commerce shipments tied to China‑linked discount sellers such as Shein and Temu. UPS also has been delivering millions fewer packages for Amazon.com, its largest customer, as it weeds out business that weakens profits.
UPS CEO Tome said the company would return to revenue and profit growth from the second quarter due to its transition to higher-paying shipments and cost cuts it undertook in recent quarters.
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 lack of further details from UPS on its second-quarter forecast and a margin miss at the company’s U.S. Domestic segment, the company’s top revenue driver, “is likely to be viewed unfavorably,” Evercore ISI analyst Jonathan Chappell wrote in a note.
Jefferies, too, said the segment’s adjusted operating margin of 4% was at the lower end of its 4% to 5% expectation.
Atlanta-based UPS reported adjusted net income of $1.07 per share for the three months ended March 31, compared with $1.49 per share a year earlier, but beat analysts’ expectation of $1.02, according to data compiled by LSEG.
Quarterly revenue at the world’s largest parcel delivery firm fell 1.6% to $21.2 billion. However, revenue per piece at its core U.S. Domestic segment rose 6.5%.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Anil D’Silva and Nick Zieminski)