After reaching a deal over the summer with its unionized workers, United Parcel Service (UPS) could 🌌still be struggling to absorb the effects of the labor contract when it rep𒁃orts earnings.

UPS is expected to report a 32% drop in its year-over-year 澳洲幸运5官方开奖结果体彩网:earnings per share when it delivers its earnings report on Jan. 30 before markets open, according to data from Visible Alpha. The private package delivery service is also expected to report a 39% decline in 澳洲幸运5官方开奖结果体彩网:net income to about $2.1 billion in the fourth qu꧟arter, while its projected revenue of $25.4 billion would represent a drop of 5.9% from 2022’s fourth quarter.

Over the summer, UPS averted a strike after it 澳洲幸运5官方开奖结果体彩网:negotiated 🍬a neܫw deal with the Teamsters union representing 330,000 of its workers, resulting in 澳洲幸运5官方开奖结果体𝓰彩网:higher costs for the Atlanta-b🃏ased company. The deal includes pay raises for workers, truck upgrades, and other condiꦑtions set out in the contra𒈔ct.

Key Metric

The contract negotiations slowed UPS’s traffic as consumers prepared for a potential strike, but CEO Carol Tomé said during the company’s last earnings report that shipping volume was beginning to return. However, disruptions prompted UPS to drop its full-year 澳洲幸运5官方开奖结果体彩网:operating margin to 10.8%, lowering it a second time from the 11.8% projection it made in J🔴uly. 

After reporting a steep decline in the third quarter, analysts are again expecting UPS to report lower operating margins at 11.07%. That's more than 75 basis points lower than the 2022 fourth-quarter reading, but better than the drop of 650 basis points it reported in the prior quarter.

A better-than-expected operating margin c🅷ould show that the company is making progress on integrating the conditions of the union contract. 

Business Spotlight

Even before the contract negotiation, UPS struggled with lower deliveries and package volumes as lower global demand hamstrung the delivery service, leading it to 澳洲幸运5官方开奖结果体彩网:scale back its full-year 🎶revenue ta♉rget on its past two earnings reports.  The company is also facing increasing competition from Amazon (AMZN), ജwhich reportedly s𒉰urpassed UPS in shipping volume in 2022. 

While UPS has seen a slowdown in the U.S., it hasn’t prevented the company from expanding its global footprint, with plans to open a healthcare facility in Dublin and a logistics facility in India. The company in October also purchased Happy Returns, a firm that specializes in facilitating returns on e-commerce purchases, as UPS moves to gain more delivery volume.

The slower delivery volumes and higher labor costs have had an impact on the company’s share price, which lost about 10.7% over the past year through Monday's close to about $158 per share.