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UPS Second-Quarter 2024 Earnings Analysis United Parcel Service, Inc. (NYSE: UPS) recently released its second-quarter 2024 earnings report, revealing a mixed performance. The company reported consolidated revenues of $21.8 billion, showing a slight decline of 1.1% compared to the previous year. The operating profit for the quarter was $1.9 billion, marking a significant 30.1% drop from the same period in 2023.
In terms of diluted earnings per share (EPS), the reported figure was $1.65, while the adjusted diluted EPS stood at $1.79, reflecting a decrease of 29.5% from the previous year's figure.
Segment Performance Breakdown - U.S. Domestic Segment: This segment, a key revenue driver for UPS, experienced a 1.9% revenue decline to $14.1 billion. The operating profit for this segment also decreased to $989 million, resulting in an adjusted operating margin of 7.1%.
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International Segment: The revenue for this segment decreased by 1.0% to $4.37 billion, with an operating profit of $718 million, down from $883 million in the previous year.
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Supply Chain Solutions Segment: This segment witnessed a 2.6% revenue increase to $3.3 billion, driven by growth in logistics, particularly in healthcare. However, the operating profit for this segment declined from $295 million to $237 million.
Shortfall in Expected Performance UPS failed to meet market expectations in terms of both revenue and earnings per share. The actual adjusted EPS of $1.79 fell short of the projected $2.00 by $0.21. Similarly, the reported revenue of $21.8 billion was below the anticipated $22.17 billion by approximately $370 million.
CEO's Comments and Future Guidance Despite the challenges faced during the quarter, CEO Carol Tomé highlighted a return to volume growth in the U.S. for the first time in nine quarters. However, this growth was insufficient to offset the overall decline in operating profit and revenue. The company provided updated full-year 2024 financial guidance, expecting consolidated revenue of around $93.0 billion and an adjusted operating margin of approximately 9.4%.
Share Repurchase Program UPS has restarted its share repurchase program, targeting $1 billion annually, demonstrating its commitment to enhancing shareholder value amidst financial challenges. The company aims to stabilize its financial performance and return to operating profit growth in the latter part of the year.
Disclaimer: The author is not associated with any securities discussed in this analysis.
