UPS trims full-year guidance: ‘this is a beneficial outlook for FedEx’

United Parcel Service Inc (NYSE: UPS) opened in the red today after reporting weaker-than-expected revenue for its fiscal second quarter.

UPS stock down on lowered guidance

Investors are disappointed because the management lowered its guidance for the full year as well.

UPS now forecasts about $93 billion in revenue this year and expects operating margin to sit around 11.8%. On CNBC’s “Squawk Box”, Evercore ISI analyst Jonathan Chappell said this morning:

UPS continues to expect $5.3 billion in capital expenditures this year. It also reiterated its guidance for $5.4 billion in dividend payments and $3.0 billion worth of share repurchase in 2023.

UPS Q2 financial highlights

• Earned $2.08 billion versus the year-ago $2.85 billion
• Per-share earnings also declined from $3.25 to $2.42
• Adjusted EPS printed at $2.54 as per the press release
• Revenue tanked 10.9% year-on-year to $22.06 billion
• Consensus was $2.49 a share on $23.04 billion revenue
• Adjusted operating margin came in at 13.2% in fiscal Q2

What else was noteworthy?

Other notable figures in earnings report include a wider-than-expected 6.9% revenue decline in the U.S. domestic segment.

International and supply chains solutions tanked 13% and 23.4%, respectively – also shy of Street estimates. According to the Evercore ISI analyst:

Note that UPS has now reached a “win-win-win” agreement with the aforementioned labour union that represents over 300,000 of its employees. Its shares are now trading roughly at the same price at which they started 2023.