United Parcel Service (UPS) cut its financial outlook for the year amid negotiations with the Teamsters union to avoid a strike, the logistics company said on Tuesday.
UPS reached a tentative, $30 billion, agreement with the International Brotherhood of Teamsters on July 25, 2023 to avoid a work stoppage, with the union voting to ratify the new agreement. Electronic voting began on Aug. 3, and will conclude on Aug. 22.
UPS now predicts annual consolidated revenue at around $93 billion and adjusted operating margin of roughly 11.8%. Below the previous guidance of $97 billion and 12.8%.
The guidance change reflects “the volume impact from labor negotiations and the costs associated with the tentative agreement”, UPS said.
In June, 97% of the UPS Teamsters union’s 340,000 members voted to authorize a strike for better pay and working conditions, including air conditioning in new models of the company’s brown delivery trucks.
Meanwhile, the delivery company also posted a 10.9% drop to $22.1 billion in consolidated revenue for the second quarter.
“UPS is stronger than ever. Looking ahead, we will stay on strategy to capture growth in the most attractive parts of the market and make our global integrated network even more efficient” UPS chief executive Carol Tomé said despite the revenue decrease.
Tomé also thanked UPS customers for remaining with the company throughout the labor negotiations.
UPS consolidated operating profits for the second quarter reached $2.8 billion, down 21.4% compared to the second quarter of 2022, and down 18.4% on an adjusted basis.
Diluted earnings per share peaked at $2.42, 22.8% below the year $2.54 from the year-ago period.
UPS shares have gained 4% this year, trailing the S&P 500’s nearly 17% gain over the same period.
FOX Business’ Eric Revell contributed to this story.