Massive Layoff Announced

( – UPS has announced a significant workforce reduction of 12,000 jobs aimed at aligning resources and reducing cost in the face of challenging business conditions as revealed in its fourth-quarter earning report.

This decision as part of the company’s strategy for 2024 is expected to result in approximately $1 billion in savings according to CEO Carol Tomé. This news comes alongside the company’s reported shortfall in revenue compared to Wall Street estimates with drops in shipping volume both internationally and domestically.

Tomé described 2023 as a difficult and disappointing year highlighting decline across volume, revenue and operating profits in all business segments of UPS. The company stock value experienced a significant dip of more than 8% following the announcement.

UPS adjusted earnings stood at $2.47 per share slightly surpassing the Wall Street prediction of $2.46 per share.

However revenue of $24.92 billion did not meet the expected $25.43 billion.

The final quarter of 2023 saw the company net income drop to $1.61 billion, or $1.87 per share, a steep decline from the $3.45 billion or $3.96 per share reported in the same period the previous year. Adjusting for one-time items, the earnings per share were $2.47.

There was a notable 7.8% decrease in revenue to $24.9 billion from $27 billion the previous year. The average daily volume decreased by 7.4% domestically and 8.3% internationally. The international decline was particularly acute in Europe and was compounded by freight challenges in the Red Sea region and the Panama and Suez canals.

While the report didn’t directly link the layoff to the August labor contract negotiation with the Teamsters Tomé acknowledged these discussions and the overall economic environment as contributing factor to UPS’s underwhelming performance.

Additionally UPS is considering divesting its Coyote truck brokerage business, described by Tomé as subject to significant earnings volatility. She also announced plans for a return to a traditional five-day office work week for employees in 2024.

Looking forward UPS anticipates its 2024 revenue to range between $92 billion and $94.5 billion, with an adjusted operating margin of around 10% to 10.6%.