MW UPS to cut Amazon business by more than 50%. Its stock is tumbling.

By Tomi Kilgore

UPS resumed pattern of revenue misses even as largest U.S. package business beat, and provided a downbeat 2025 outlook

Shares of United Parcel Service Inc. were flirting with a record selloff in early trading Thursday, after the package delivery giant announced a deal to cut business with its largest customer by more than half as part of a plan to focus on more profitable businesses.

The company also resumed its pattern of quarterly revenue misses and provided a downbeat full-year outlook. Meanwhile, the company beat profit expectations, and the largest U.S. package business topped expectations.

The stock $(UPS)$ tumbled 11.9% in premarket trading, putting it on track to suffer its second-biggest one-day selloff, behind only the record 12.1% plunge on July 23, 2024.

UPS said it reached an agreement in principle with its largest customer to lower its volume by more than 50% by the second half of 2026. In UPS's latest annual report, the company singled out Amazon.com Inc. $(AMZN)$ and its affiliates, saying they represented about 12% of its revenue, nearly all in its U.S. package business.

"We are making business and operational changes that, along with the foundational changes we've already made, will put us further down the path to becoming a more profitable, agile and differentiated UPS that is growing in the best parts of the market," said Chief Executive Carol Tomé.

The company also said effective Jan. 1, it has brought in-house 100% of its UPS SurePost product, which was offered in collaboration with the U.S. Postal Service, and is "reconfiguring" its U.S. network.

The actions target cost savings of about $1 billion.

For the fourth quarter, revenue rose 1.5% from a year ago to $25.30 billion, below the FactSet consensus of $25.41 billion. While third-quarter revenue had topped expectations, that snapped a streak of eight-straight quarterly misses.

For 2025, the company expects revenue of $89.0 billion, compared with the current FactSet consensus of $95.0 billion.

Among UPS business segments, fourth-quarter U.S. Domestic revenue rose 2.2% to $17.31 billion to beat the FactSet consensus of $17.22 billion.

International revenue increased 6.9% to $4.92 billion, topping expectations of $4.79 billion, while supply-chain-solutions revenue dropped 9.1% to $3.07 billion to miss forecasts of $3.36 billion.

Net income rose to $1.72 billion, or $2.01 a share, from $1.61 billion, or $1.87 a share.

Excluding nonrecurring items, such as a $639 million in charges, which includes a $506 million pension charge, adjusted earnings per share rose 11% to $2.75 to beat the FactSet consensus of $2.53.

UPS's stock has declined 7.8% over the past 12 months through Wednesday, while the S&P 500 index SPX has advanced 22.6%.

-Tomi Kilgore

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January 30, 2025 07:16 ET (12:16 GMT)

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