Revenue declined at UPS in the second quarter and the package delivery company lowered its full-year revenue expectations by $4 billion, primarily due to a tentative labor contract reached late last month with its 340,000 unionized workers.
Shares for the Atlanta company slid more than 5% before the market opened Tuesday.
UPS reached a tentative deal with the International Brotherhood of Teamsters, potentially averting a strike that threatened to disrupt package deliveries for millions of businesses and households nationwide.
Under the agreement, which still needs to be approved by union members, full- and part-time union workers will get $2.75 more per hour in 2023, and $7.50 more by the end of the five-year contract. The deal includes a provision to increase starting pay for part-time workers — whom the union says are the most at risk of exploitation — from $16.20 per hour to $21 per hour. The average pay for part-timers had been $20.
Voting on the new contract begins Aug. 3 and concludes Aug. 22.
United Parcel Service Inc. earned $2.08 billion, or $2.42 per share, for the three months ended June 30.
Adjusted earnings were $2.54 per share, which beat the $2.51 per share that analysts surveyed by Zacks Investment Research were looking for.
Revenue declined to $22.06 billion from $24.77 billion, missing Wall Street's estimate of $22.88 billion.
Revenue for the domestic and international segments fell as average daily volume dropped.
UPS said that it now foresees 2023 consolidated revenue of about $93 billion. Its prior forecast was for revenue of around $97 billion.
Analysts polled by FactSet expect xx billion.