UPS Posts 1.5% Revenue Growth; Shares Fall on Amazon Deal
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UPS Inc. experienced revenue and earnings growth despite a tougher freight market in the fourth quarter of 2024, the parcel delivery company reported Jan. 30.
Atlanta-based UPS posted net income of $1.72 billion, or $2.01 a diluted share, for the three months ending Dec. 31. That compared with $1.61 billion, $1.87, during the same time the previous year. Total consolidated revenue increased 1.5% to $25.3 billion from $24.9 billion.
“The positive momentum we saw in the third quarter continued into the fourth quarter,” UPS CEO Carol Tomé said during a call with investors. “Importantly, our U.S. domestic operating margin was over 10% for the quarter, reflecting improved revenue quality and strong expense control. Looking at the full year, consolidated revenue was $91.1 billion, slightly above last year. Consolidated operating profit totaled $8.9 billion.”
Still, the company’s share price sank Jan. 30. UPS announced it had reached an agreement with Amazon, its largest customer, to lower volume by more than 50% in the second half of 2026.
UPS generated $10.1 billion in cash from operations in 2024. The company returned $5.9 billion to shareholders in the form of dividends and share repurchases. Tomé also highlighted that the company grew further in the small and medium-size business segment. SMB penetration increased to 28.9% of volume the company moved in the U.S.
“DAP, our digital access program, was a big driver of the increase,” Tomé said. “And in 2024, we generated $3.3 billion in global DAP revenue, a 17% increase year over year. As we discussed, we are moving from a scanning network to a sensing network through our smart package, smart facility, RFID initiative. In 2024, we equipped nearly 60,000 U.S. packaged cars with sensors, which represents 66% of our fleet, eliminating 12 million manual scans per day, and enhancing package visibility for our customers with the network of the future.”
UPS accelerated its operational closures ahead of schedule to more than 49. About 63% of its U.S. volume now flows through automated facilities. The company also made efforts to bolster its health care logistics business to further support growth. UPS completed the acquisition of European health care logistics and cold chain company Frigo-Trans earlier in the month.
“We closed out 2024 with an outstanding peak, delivery of best-in-class service and financial results ahead of our target,” Tomé said. “But as we wrapped up 2024, it became clear to us that if we didn’t address three specific challenges facing us in the U.S., we could lose momentum.”
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Tomé added that the first challenge comes in addressing the dynamics of the small-package market, especially now that it has become a slow-growth one with changing package characteristics. The second challenge comes from the concentration of volume and revenue with its largest customer. The third challenge was its reliance on USPS to provide SurePost products.
“In this case, the USPS is changing its operating model, which we believe puts service at risk,” Tomé said. “So we’ve taken actions to address all three of these challenges head-on, including doubling down on revenue quality and serving the customer segments we want to serve best.”
UPS previously described this effort to reform the business as its better and bolder approach. The focus has been on being a customer-first, people-led and innovation-driven strategy since it launched March 2024. UPS hopes to position itself to become the premium small package provider and logistics partner in the world.
“We believe CEO Carol Tomé’s ‘Better and Bolder’ strategy, which builds upon the previous ‘Better, not Bigger’ strategic phase, will lead to increased profitability as the company focuses on ensuring it is realizing appropriate returns on the large sums of capital it has invested in its delivery network through pricing, efficiency and cost actions,” Faisal Hersi, industrials analyst at Edward Jones, wrote in a report. “In addition, international growth and the continued rise in e-commerce should help drive demand for UPS’ services. We think UPS shares are attractively valued given our positive longer-term outlook.”
U.S. domestic segment revenue increased 2.2% to $17.3 billion from $16.9 billion, driven by an increase in revenue per piece and increases in air cargo. Operating profit increased 16% to $1.68 billion from $1.45 billion.
International segment revenue increased 6.9% to $4.92 billion from $4.61 billion during the prior year. This was driven by an increase in average daily volume. Operating profit increased 14.5% to $1.02 billion from $890 million.
Supply chain solutions revenue decreased 9.1% to $3.07 billion from $3.37 billion due to a reduction in revenue after the divestiture of Coyote Logistics. This was partially offset by growth in air and ocean forwarding. Operating profit increased 62.5% to $226 million from $139 million.
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and UPS Supply Chain Solutions is No. 4 on the TT Top 100 list of the largest logistics companies.
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