UPS to cut 12,000 jobs, shares drop nearly 6% in premarket trading

UPS slid before the opening bell on Tuesday as the package delivery company announced that it's eliminating approximately 12,000 jobs and looking at strategic options for its Coyote truck load brokerage business.

Last year union members at UPS voted to approve a tentative contract agreement, putting a final seal on contentious labor negotiations that threatened to disrupt package deliveries for millions of businesses and households nationwide.

On a conference call on Tuesday morning, CEO Carol Tome said that by reducing the company's headcount UPS will realise USD 1 billion in cost savings.

We are going to fit our organisation to our strategy and align our resources against what's wildly important, Tome said.

She also announced that this year UPS is returning to a policy of having its employees back in the office five days a week.

United Parcel Service Inc. anticipates 2024 revenue in a range of approximately USD 92 billion to USD 94.5 billion.

Analysts surveyed by FactSet predict revenue of USD 95.51 billion.

UPS also posted fourth-quarter revenue of USD 24.92 billion, below analysts' estimates of USD 25.31 billion and a decline of 7.8 per cent from the prior year.

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

The company's board approved an increase of 1 cent in its quarterly dividend to USD 1.63 per share, payable March 8 to shareholders of record February 20.

Shares of UPS dropped nearly 6 per cent in premarket trading.