United Parcel Service (UPS, Financials) reported fourth-quarter earnings that exceeded analyst expectations, driven by revenue growth and operational improvements.

The corporation is emphasizing operational efficiency in 2025 and higher-margin business divisions while lowering costs to counter a projected drop in Amazon shipment volume.

In the fourth quarter, UPS brought in $25.3 billion, a 1.5% rise over last year. Operating profit increased 11.2% to $3.1 billion; adjusted profits per share came in at $2.75, above consensus projections of $2.53. From operations, the corporation brought in $10.1 billion in cash; via buybacks and dividends, it returned $5.9 billion to investors.

With revenue per package rising 2.4%, U.S. domestic operations brought in 2.2% to $17.3 billion. Supported by an 11.7% rise in export volume, international income rose 6.9% to $4.9 billion. While air and ocean freight forwarding grew by 10.3%, supply chain income dropped with Coyote Logistics's sale.

Targeting $1 billion in cost cuts, UPS is implementing its "Efficiency Reimagined" program. The strategy calls for operational tweaks and network improvement to offset a projected Amazon drop in package volume. To concentrate on small and medium-sized companies, healthcare logistics, and international shipping, the corporation promised to cut Amazon-related shipments by over 50% by the second half of 2026. As of Jan. 1, 2025, it also took complete management of SurePost delivery from the U.S. Postal Service; but there is no predicted major financial consequence from this shift.

UPS projects an operating profit of 10.8% and a sales goal of $89 billion for 2025. Though volume is expected to decline, U.S. domestic business is expected to witness a 6% increase in revenue per package. With an operating margin of 18.6%, the foreign division is likely to see mid-single-digit volume increase. Forecasted at $11 billion with an 8.5% margin is supply chain income. Every quarter UPS anticipates domestic margins to rise; by year-end they will have reached 8.8%.

Although analysts pointed highlighted UPS's emphasis on profit growth and cost control, they expressed worries on the effect of dropping Amazon business. With an eye on small enterprises and healthcare logistics, CEO Carol Tome said the firm is giving profitable, agile growth top priority.

With 11.8% of UPS income coming from Amazon shipments in 2024, the volume loss poses a major concern. Analyzers also mentioned competition pressures from FedEx (FDX, Financials) and the U.S. Postal Service, which may affect price. Maintaining profitability of the firm depends on the effectiveness of its cost-cutting plan.

UPS is turning its attention to maximize income sources and improve operational effectiveness. Although fourth-quarter numbers were good, the company's financial success in 2025 would depend critically on its capacity to control decreasing Amazon volumes and carry out cost cuts.