United Parcel Service (UPS) has announced its fourth-quarter financial results, revealing consolidated revenue of $24.9 billion, down 7.8% from the same period in 2022.
Shortly after the results were released, Bloomberg reported on Tuesday that UPS announced plans to cut 12,000 jobs, or about 2.5% of its global workforce. This significant reduction would result in savings of $1 billion in 2024 and beyond, according to Chief Executive Officer Carol Tomé.
Most of the job cuts are expected to come from the company’s 85,000-strong management team and some contractors.
Notably, UPS is exploring the potential sale of Coyote, the truckload brokerage business it acquired in 2015.
The drop in revenue was accompanied by a notable decline in operating profit, which stood at $2.5 billion – a 22.5% decline compared to Q4 2022, and a 27.1% decline on an adjusted basis.
UPS attributes the financial downturn in part to a total of $512 million in charges in Q4 2023, including a non-cash pension mark-to-market charge, transformation and other charges, and a non-cash impairment charge related to the Coyote brand in the truckload brokerage unit.
Acknowledging the challenges faced in 2023, the UPS boss said the company remained focused on its strategy despite a unique and challenging year.
“I want to thank UPSers for delivering the best on-time performance of any carrier for the sixth consecutive year,” said Carol Tomé, UPS chief executive officer. “2023 was a unique and challenging year, and through it all we remained focused on controlling what we could control, staying true to our strategy and strengthening our foundation for future growth.”
It is worth noting that the International segment experienced a more significant decline than the U.S. segment, with a 6.9% decrease in revenue, driven by an 8.3% decrease in average daily volume, primarily due to softness in the European market.
Finally, softness in the European market also played a significant role in the overall decline in UPS’s International segment.