United Parcel Service forecasts 2026 revenue above expectations

(Reuters) -United Parcel Service forecast better-than-expected 2026 total revenue on Tuesday, as the world’s largest parcel delivery company works to aggressively cut costs to offset a post-pandemic shipping slowdown due to lower e-commerce demand.

Shares of the company rose nearly 3% in premarket trading after UPS also said it expects total savings of $3 billion by the end of 2028. Earlier this year, it had forecast 2024 revenue below Wall Street’s target amid weak demand from its retail, manufacturing and high tech customers.

“After coming off a difficult market in 2023, the small package industry (e-commerce deliveries) is poised to return to growth in 2024 and beyond,” UPS CEO Carol Tomé said on Tuesday.

The company expects 2026 revenue between $108 billion and $114 billion, above LSEG estimates of $102.12 billion.

The delivery firm, seen as a bellwether of the global economy, said in January it planned to cut $1 billion in costs this year and did not expect business conditions to improve until the second half of 2024.

UPS has been cutting jobs, parking planes and leaning on package tracking and other technology to help offset pressures from tepid demand and labor costs.

The company will share details of its strategic growth and productivity initiatives, as well as discuss its three-year financial targets and cost cut plans at its investor and analyst conference later in the day.

Atlanta-based UPS said it expects capital spending from 2024 to 2026 to be about 5.5% of total revenue.

(Reporting by Kannaki Deka in Bengaluru; Editing by Shinjini Ganguli)