UPS expects demand to make a U-turn this year

UPS leaders said the parcel delivery service’s first-quarter performance stayed on its planned route, keeping the company on a path to a turnaround in the foreseeable future.

“Our financial performance in the first quarter was in line with our expectations, and average daily volume in the US showed improvement through the quarter,” CEO Carol Tomé said in a news release. “Looking ahead, we expect to return to volume and revenue growth.”

Consolidated revenue across its three segments—US, international, and supply chain solutions—declined 5.3% YoY to $21.7 billion, Tomé told analysts during an earnings call. UPS reported a decline in average daily volume (ADV) of 3.2% in its domestic segment and 5.8% internationally.

“While the macro environment in the first quarter showed improvement in some areas, continued soft demand pressured all three parts of our business,” CFO Brian Newman said on the earnings call.

Tomé cited the slowing rate of decline in customer demand as reason for optimism. In the US, the decline in average daily volume fell during the quarter, with March demand down by less than 1%. The rate of decline “showed marked improvement compared to the fourth quarter,” she said, during which ADV decreased 7.4% YoY.

Operating profit decreased 31.5% YoY to $1.7 billion, primarily due to higher labor costs from the company’s new contract with the Teamsters union, Tomé said.