Here's What to Expect From UPS in the Second Half of 2024

Core Viewpoint - UPS is expected to experience a significant profit increase in the second half of 2024, following a challenging first half marked by a decline in profits and delivery volumes [1][2]. Group 1: Financial Guidance - For the first half of 2024, UPS anticipates a revenue decline of 1% to 2%, while the second half is projected to see revenue growth of 4% to 8%, with total revenue for the year estimated between $92 billion and $94.5 billion [2]. - Adjusted operating profit is expected to decrease by 20% to 30% in the first half, but is forecasted to increase by 20% to 30% in the second half, with a full-year profit estimate of $9.2 billion to $10 billion [2]. Group 2: Cost Management - UPS plans to cut 12,000 jobs in 2024, which is expected to generate $1 billion in cost savings, with 75% of these cuts occurring in the first half [4]. - The company will begin to see favorable cost comparisons in the second half of 2024 as it laps the increased labor costs from a new contract established in 2023 [3][4]. Group 3: Volume Recovery - Management expects delivery volumes to recover in the second half of 2024, contributing to the anticipated revenue growth [5][7]. - The U.S. domestic package segment saw a decline of 3.2% in the first quarter of 2024, but the rate of decline slowed, and a slight positive growth is expected in the second quarter [6][7]. Group 4: Future Outlook - UPS is positioned for a stronger performance in the second half of 2024, with increasing volumes, growing revenue, and easing cost comparisons [7]. - The company's focus on key markets such as healthcare and small and medium-sized businesses, along with investments in automation, is expected to drive revenue growth and margin expansion beyond 2024 [7].