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UPS shares tumble as investors worry about post-pandemic growth plan By Reuters

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UPS shares tumble as investors worry about post-pandemic growth plan By Reuters
© Reuters. FILE PHOTO: Snow falls at the United Parcel Service (UPS) WorldPort Center located at the Louisville Muhammad Ali International Airport in Louisville, Kentucky, USA, February 15, 2021. REUTERS / Bryan Woolston

(Reuters) – Shares in United Parcel Service Inc fell as much as 6% on Wednesday as the company known for delivering everything from Amazon.com packages to coronavirus vaccines, laid out plans for post-pandemic growth.

During the company’s analyst day on Wednesday, executives at the world’s largest parcel company said they are prioritizing lucrative deliveries over volume.

They issued growth forecasts largely in line with Wall Street estimates and said UPS is struggling to win more contracts with healthcare firms and small and medium-sized enterprises (SMEs). At the same time, the Atlanta-based firm is racking up costs on key projects, including expanding Saturday deliveries across the United States.

The company forecast an adjusted operating margin for 2023 that ranges from about 12.7% to 13.7%.

About half of the company’s core US market margin expansion would be generated this year through price increases and increased business from SMEs, executives said.

UPS shares have nearly doubled over the past year, fueled by rising pandemic-related shipments of everything from food and furniture to medical masks and vaccines.

They were down 4.7% to $ 199.88 in afternoon trading after falling to $ 197 earlier in the session, when analysts were pressuring executives on how UPS will maintain momentum as demand moderates. , pandemic surcharges decrease and competitors – including its No. 1 customer, Amazon.com Inc (NASDAQ 🙂 – increase.

“Not all packages are attractive to us,” said Executive Director Carol Tome.

Healthcare deliveries, including temperature-controlled shipments from companies such as the vaccine manufacturer Pfizer Inc (NYSE :), are among the most profitable in the business. SMEs are more attractive because customers may require a higher level of service and tend to lack the strength of large companies like Amazon to negotiate volume discounts.

Executives said their weekend delivery drive uses existing infrastructure and that they are “looking” for a same-day delivery service.

UPS forecast revenue between $ 98 billion and $ 102 billion by 2023, compared to the average analyst estimate of $ 100.19 billion, according to Refinitiv data. It reported annual revenue of $ 84.6 billion in 2020.

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