United Parcel Service (UPS) recently announced its third-quarter results, which significantly exceeded Wall Street's expectations. The company's robust performance was accompanied by news of its ongoing turnaround efforts, including a substantial reduction in its workforce, amounting to approximately 48,000 job cuts. Following the announcement, UPS shares surged by over 7% in afternoon trading on Tuesday, reflecting investor confidence in the company's strategic direction.
For the three months ending September 30, UPS reported earnings of $1.31 billion, translating to $1.55 per share. This marks a decrease from the previous year's earnings of $1.99 billion, or $1.80 per share. However, when excluding one-time costs, UPS's earnings climbed to $1.74 per share, comfortably surpassing the consensus estimate of $1.31 per share from analysts surveyed by Zacks Investment Research. Additionally, the company recorded a revenue of $21.42 billion, exceeding Wall Street's forecast of $20.84 billion.
As part of its comprehensive turnaround strategy, UPS disclosed in a recent regulatory filing that it has already eliminated around 34,000 operational positions and closed daily operations at 93 leased and owned facilities during the first nine months of the year. The company also announced an additional 14,000 job cuts, primarily affecting management roles. UPS is actively seeking to identify further facilities for closure, as it continues to optimize its operational efficiency.
In April, UPS had previously indicated plans to cut about 20,000 jobs and shutter over 70 facilities as part of its efforts to significantly reduce its volume of shipments handled for Amazon, its largest customer. At that time, UPS projected the closure of 73 leased and owned buildings by the end of June. The company has emphasized that it is still evaluating its network and may discover more locations to close as it progresses with its restructuring.
In January, UPS announced a pivotal agreement with Amazon, aiming to decrease its shipment volume by more than 50% by the second half of 2026. During the fourth-quarter earnings call in January, CEO Carol Tomé highlighted that UPS had maintained a partnership with Amazon for nearly 30 years, but the company chose to reassess this relationship when the contract came up for renewal this year.
As of September 30, UPS has achieved approximately $2.2 billion in cost savings through its restructuring efforts. The company is optimistic about reaching a total of $3.5 billion in year-over-year cost savings by 2025, positioning itself for long-term stability and growth in an increasingly competitive market.
In summary, UPS's solid third-quarter performance and decisive turnaround actions, including significant job cuts and facility closures, demonstrate the company's commitment to enhancing operational efficiency and adapting to market dynamics.
