Despite being designated an essential service, United Parcel Service (UPS) - Get United Parcel Service Inc. Report on Tuesday reported first-quarter earnings that missed analysts’ forecasts as the coronavirus pandemic negatively impacted shipments of goods both within and outside the United States.
UPS posted adjusted earnings of $1 billion, or $1.15 a share, down from $1.2 billion, or $1.39 a share, in the comparable year-ago quarter and below the $1.24 a share expected by analysts polled by Factset.
Revenue came in at $18.03 billion, up from $17.6 billion a year ago and ahead of analysts’ forecasts of $17.3 billion. In the U.S., adjusted operating profit was $401 million vs. $694 million last year; internationally, adjusted operating profit was $558 millon vs. $612 million.
While UPS and other carriers have been designated essential services by governments around the world, the shift to moving essential products like personal protection equipment and other goods specific to the Covid-19 pandemic had an adverse impact on earnings, the company said.
“The progression of stay-at-home restrictions instituted across the country as a result of coronavirus closed businesses and disrupted supply chains, resulting in an unprecedented shift in customer and product mix in the quarter,” UPS said.
“The company’s automated hubs and other transformation investments generated efficiency gains; however, these benefits did not offset the significant headwinds from the impact the coronavirus pandemic had on UPS customers, coupled with higher self-insurance accruals,” the company added.
Like others, the Atlanta-based company said it was withdrawing its previously issued 2020 revenue and per-share earnings guidance, though did say it expects to cut its 2020 capital expenditures by approximately $1 billion from previous estimates. The company also said it was suspending share buybacks for 2020.
Shares of UPS were down 5.1% at $97.33 in trading on Tuesday.