UPS sees ‘mild recession’ in 2023 and posts first revenue decline since the 2008 financial crisis
Shares of United Parcel Service Inc. rallied Tuesday, even after the package-delivery giant reported a surprise decline in fourth-quarter revenue, missing Wall Street expectations for the first time in 12 quarters, and warned of the first yearly decline in revenue in 14 years.
And despite the downbeat revenue outlook for 2023, the company is targeting an adjusted operating margin of between 12.8% and 13.6%, which Cowen analyst Helane Becker said was better than expected and reflected how management was dealing with a difficult operating environment. The increase in U.S. package revenue came as revenue per piece increased 7.2%, with higher prices offsetting a 3.8% drop in average daily volume. UPS said half the volume decline was from its largest customer, which the company has indicated in previous annual reports to be Amazon.com Inc. AMZN .
For 2023, UPS expects revenue of between $97 billion and $99.4 billion, down from 2022 revenue of $100.34 billion and below the FactSet consensus of $99.89 billion. That would be the first yearly decline in revenue since 2009, during the height of the financial crisis.
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