Despite Cost Cuts, UPS Forecasts Revenue Growth In 2026

(CTN News) – The world’s largest parcel delivery company, United Parcel Service (UPS), on Tuesday forecast revenue above estimates for 2026 as part of a three-year plan that prioritizes high-margin parcels and aggressive cost reductions.

In afternoon trading, the company’s shares were still down 8.2%.

Morningstar analyst Matthew Young stated that the shares were down indicating that guidance for 2026 was less optimistic than expected (including anticipated capital spending).

To grow volume and margins, the package delivery firm plans to leverage its healthcare logistics segment and small- and medium-business customers following the post-pandemic slowdown in e-commerce demand.

Despite a challenging market in 2023, UPS CEO Carol Tomé has stated that the small package industry will grow in 2024 and beyond.

It is expected that the company will spend about $6 billion over the next three years on its plan, known as “Network of the Future”, in order to further automate its facilities and use robotic devices to bag and sort packages.

UPS CFO Brian Newman added, “This will enable us to reduce our reliance on labor as well as drive the productivity flywheel. This will result in about $3 billion in savings over the next five years with 50 percent of them occurring by 2026.”

UPS forecast revenue for 2024 that was below Wall Street’s expectations due to weak demand from its retail, manufacturing, and high-tech customers earlier this year.

According to the company, revenue is expected to range between $108 billion and $114 billion in 2026, above LSEG estimates of $102.12 billion. The company anticipates that by 2026 it will achieve a consolidated adjusted operating margin growth of 13%.

UPS, based in Atlanta, said it expects total capital expenditures from 2024 to 2026 to range between $17 billion and $18 billion, or approximately 5.5% of total revenues.

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