April 28 (Reuters) – United Parcel Service posted a drop in first-quarter adjusted profit, as it scaled back deliveries for top client Amazon.com, although its move to focus more on higher-margin shipments helped it keep its full-year revenue forecast.
The parcel giant has been cutting its exposure to low-margin, high-volume shipments from customers such as Amazon, instead shifting its focus to higher-margin business-to-business deliveries to support profitability and control costs.
Over the last year, UPS has cut thousands of jobs as it ramps up automation at sorting hubs, in a bid to bring down operating costs.
The strategic shift comes as U.S. logistics firms have been under pressure over the past year from changing trade policies, notably the loss of duty-free “de minimis” treatment for low-value e-commerce shipments tied to China‑linked discount sellers such as Shein and Temu.
UPS CEO Carol Tome said the company would return to revenue and profit growth from the second quarter due to its transition to higher-paying shipments and cost cuts it undertook in recent quarters.
The company maintained its forecast of a 1.2% rise in 2026 revenue to $89.7 billion and an adjusted operating margin of about 9.6%. Still, shares of the company were down 2.9% in pre-market trading.
The lack of further details from UPS on its second-quarter forecast and a margin miss at the company’s U.S. Domestic segment, the company’s top revenue driver, “is likely to be viewed unfavorably,” Evercore ISI analyst Jonathan Chappell wrote in a note.
Atlanta-based UPS reported adjusted net income of $1.07 per share for the three months ended March 31, compared with $1.49 per share a year earlier, beating analysts’ expectation of $1.02 according to data compiled by LSEG.
Quarterly revenue at the world’s largest parcel delivery firm also dropped 1.6% to $21.2 billion.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Anil D’Silva)
