UPS earnings Q4 2022

United Parcel Service on Tuesday reported fourth-quarter revenue that missed Wall Street’s expectations and declined from last year, as the company continues to see volume fall amid cooling demand.

The shipping and delivery company on Tuesday offered full-year guidance that fell below analyst’s expectations. It is projecting revenue between $97 billion and $99.4 billion, versus analysts’ estimates of $99.98 billion. Still, UPS expects the second half of the year to be better than the first.

Shares of the company rose about 4% in Tuesday trading.

Here’s how UPS performed in the fourth quarter, compared with what Wall Street anticipated, based on an average of analysts’ estimates compiled by Refinitiv:

• Adjusted earnings per share: $3.62 vs $3.59.
• Total revenue: $27.03 billion vs $28.09 billion.

For the three-month period ended Dec. 31, the company reported adjusted net income of $3.15 billion, or $3.62 per share, compared with $3.15 billion, or $3.59 per share, a year earlier.

UPS is monitoring headwinds like rising interest rates, high inflation and other macroeconomic factors that could continue to hamper its top line.

“We expect 2023 to be a bumpy year,” CFO Brian Newman said in a Tuesday morning call with analysts.

Yet Newman also said that UPS expects about 56% of its profit to come in during the second half of the year, counting on U.S. and international challenges easing during the later months of 2023. The company’s shares fell over 10% in 2022 as consumer spending adjusted to inflation and came down from Covid pandemic highs.

Since taking the helm in 2020, CEO Carol Tomé has been championing a “Better not Bigger” business strategy, which it adjusted to “Better and Bolder” in last quarter’s earnings announcement, focusing on high-margin shipments rather than just boosting volume. It also aims to use automation to optimize capacity during periods of shifting volumes. That strategy was put to the test last quarter as volume declines weighed on revenue.

In the fourth quarter, revenue for UPS’ domestic segment, which makes up about two-thirds of the company’s revenue and most of its business-to-consumer transactions, grew 3%. Revenue from international shipping decreased 8%, due to volume reductions and softening demand in China.

Its supply chain business saw revenue dip 18% with volume decreasing in its freight forwarding business, though it…