Shares of UPS fell after the shipping company lowered its 2023 forecast following a new tentative labor agreement that averts a strike
Shares of UPS fell after the shipping company lowered its 2023 forecast following a new tentative labor agreement that averts a strike AFP

UPS lowered its full-year outlook on Tuesday, citing the volume effects and higher costs of its recent labor negotiation as the shipping company reported a drop in quarterly profits.

UPS, which reached a tentative new labor agreement last month with the Teamsters union to avert a strike, now expects 2023 revenues of about $93 billion, down $4 billion from the prior outlook.

Shares fell in pre-market trading as the company also cut its adjusted profit margin by a percentage point to 11.8 percent.

Facing threats of a bruising nationwide strike slated to begin August 1, UPS agreed on July 25 to broad-based wage hikes and additional employee benefits in a negotiation that has been seen as a win for organized labor.

Rank-and-file workers are voting on the new UPS contract through August 22.

However, the threat of a strike prompted some UPS customers to divert orders to competing services, adding to the effects of a shift among consumers towards services and travel, and away from goods after the heady consumption of the early Covid-19 period.

Profits in the second quarter dipped five percent to $2.1 billion, while revenues dropped 11 percent to $22.1 billion.

UPS Chief Executive Carol Tome said she was "pleased" to reach the agreement with the Teamsters.

"UPS is stronger than ever," Tome said. "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."

Shares of UPS fell 6.1 percent to $171 in pre-market trading.