United Parcel Service (UPS) issued a downbeat full-year revenue outlook on Thursday after delivering a fourth-quarter topline below market estimates, while the company expects a reduction of more than 50% in volumes from its largest customer next year.

The package delivery giant expects consolidated revenue of about $89 billion for 2025, while the current consensus on FactSet is for $95.03 billion. In the previous full year, revenue edged up 0.1% to $91.07 billion, according to an earnings presentation. Shares of the company dropped 13% in premarket activity.

UPS anticipates its adjusted operating margin to be roughly 10.8% for the current year. The company is planning capital expenditures of about $3.5 billion, dividend payments of around $5.5 billion with approval from its board of directors, as well as share repurchases of roughly $1 billion.

The company said it agreed in principle with its largest customer to lower volume by more than 50% in the second half of 2026, as part of a set of strategic efforts. The group also aims to reconfigure its US network and generate $1 billion in savings through multi-year efficiency initiatives.

"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," Chief Executive Carol Tome said in a statement.

For the three months through Dec. 31, UPS posted adjusted earnings of $2.75 per share, up from $2.47 the year before and ahead of the Street's view for $2.53. Revenue increased 1.5% year over year to $25.3 billion, but was just shy of the average analyst estimate of $25.41 billion.

US domestic package segment sales rose 2.2% year over year to $17.31 billion, buoyed by a 2.4% gain in revenue per piece and increases in air cargo. International revenue moved 6.9% higher to $4.92 billion, boosted by an 8.8% growth in average daily volume. Supply chain sales slid 9.1% to $3.07 billion, weighed down by lower revenue due to the divestiture of the company's Coyote Logistics freight brokerage business last year.

The company's adjusted operating margin improved 110 basis points year over year to 12.3%, according to the presentation. Total operating expenses inched lower to $22.38 billion from $22.44 billion in the prior-year quarter. The company incurred a $639 million charge in the quarter on a GAAP basis, including a non-cash, after-tax mark-to-market pension charge of $506 million.