UPS to cut 12,000 jobs 5 months after reaching union deal
UPS said it would cut 12,000 jobs and released a revenue outlook for this year that sent its shares down sharply.
The company also hinted that its Coyote truck load brokerage business may be put up for sale. UPS acquired the Chicago-based company for $1.8 billion in 2015.
The Teamsters in September voted to approve a tentative contract agreement with UPS, putting a final seal on contentious labor negotiations that threatened to disrupt package deliveries for millions of businesses and households nationwide. The contract includes pay raises for full- and part-time union workers, the creation of 7,500 full-time jobs and the filling of 22,500 open positions, allowing more part-timers to transition to full time.
On a conference call Tuesday morning, Chief Executive Carol Tome said that by reducing the company’s headcount, UPS will realize $1 billion in cost savings. The job eliminations are anticipated to be among management roles and contractors, the company said.
UPS also said Tuesday that its board approved an increase of 1 cent in its quarterly dividend to shareholders of record Feb. 20.
“We are going to fit our organization to our strategy and align our resources against what’s wildly important,” Tome said.
Tome said that UPS is ordering employees to return to the office five days a week this year.
United Parcel Service Inc. anticipates 2024 revenue in a range of approximately $92 billion to $94.5 billion, short of Wall Street’s expectations for a figure above $95.5 billion.
Shares of UPS dropped more than 8% on Tuesday.
Revenue also came up short in the fourth quarter, sliding 7.8% to $24.92 billion. That’s just shy of Wall Street projections for $25.31 billion, according to a poll of analysts by FactSet.
Profits for the quarter that ended in December slid by more than half to $1.61 billion, or $1.87 per share, from $3.45 billion, or $3.96 per share. On an adjusted basis, quarterly earnings per share totaled $2.47, a penny above the average estimate, according to FactSet.
