United Parcel Service (NYSE:UPS) announced on Tuesday a forecast for total revenue in 2026 that surpasses expectations, as the world’s largest parcel delivery company intensifies efforts to reduce costs in response to a slowdown in shipping post-pandemic, driven by decreased e-commerce demand.
In premarket trading, shares of UPS surged nearly 3% following the announcement, buoyed by the company’s projection of total savings reaching $3 billion by the conclusion of 2028. This outlook contrasts with an earlier projection for 2024 revenue, which fell short of Wall Street’s estimates due to subdued demand from retail, manufacturing, and high-tech sectors.
CEO Carol Tomé conveyed optimism on Tuesday, noting that following a challenging market in 2023, the small package industry, particularly e-commerce deliveries, is positioned to resume growth in 2024 and beyond.
UPS anticipates total revenue for 2026 to range between $108 billion and $114 billion, outstripping LSEG’s estimates of $102.12 billion.
Recognized as a barometer of the global economy, UPS disclosed in January its intention to reduce costs by $1 billion within the year, while not anticipating an improvement in business conditions until the latter half of 2024. The company has implemented measures such as job reductions, aircraft grounding, and the utilization of package tracking technology to mitigate challenges stemming from lackluster demand and rising labor expenses.
Further details regarding UPS’s strategic growth and productivity initiatives, along with its financial targets for the next three years and cost reduction plans, will be shared during its investor and analyst conference later in the day.
Headquartered in Atlanta, UPS projects its capital expenditure from 2024 to 2026 to represent approximately 5.5% of total revenue.
Featured Image: Megapixl
