UPS reported lower revenue for the second quarter of 2024, even as US shipment volume returned to growth. The results published on 23 July show why parcel counts and financial performance need to be read separately.
Revenue and earnings
Quarterly revenue was $21.8 billion, down 1.1% year on year. Diluted earnings per share were $1.65; the adjusted figure was $1.79. Interfax reported that both revenue and adjusted earnings missed market expectations. UPS put its full-year revenue outlook at approximately $93 billion.
The annual outlook is management's estimate, not revenue already earned. Similarly, adjusted earnings are a separate measure from the reported result. A comparison should keep the same basis on both sides rather than pair an adjusted current figure with an unadjusted historical one.
Different directions across the business
- US domestic revenue fell 1.9%.
- International revenue declined 1.0%.
- Supply Chain Solutions revenue rose 2.6%.
The company said US volume grew for the first time in nine quarters. However, domestic revenue per piece declined 2.6%, primarily because of changes in product mix. In the international business, lower average daily volume was the main reason cited for weaker revenue. The logistics business, including healthcare, contributed to growth in Supply Chain Solutions.
What the volume recovery means
More shipments do not automatically generate more revenue when the average amount earned per shipment changes. Product mix describes the combination of services sold; a shift between them can move the average even without an identical price change for every customer. These quarterly figures therefore do not establish that all customers received a discount.
Nor does shipment growth alone establish profit recovery. Sorting, transport and delivery still carry costs, and revenue is not the amount left after paying them. The useful distinction in this release is between physical activity, money earned from that activity and the resulting earnings. Each answers a different question about the business.
Company contacts
Company: United Parcel Service (UPS). Media enquiries: pr@ups.com, +1 404-828-7123. Investor relations: investor@ups.com. Financial releases and supporting schedules: https://investors.ups.com. Company website: https://www.ups.com.
Your perspective
Share your thoughts on the story.