Shares of United Parcel Service Inc (NYSE:UPS) fell by 1.8% after the company reduced its annual revenue and profitability forecasts due to a decline in shipments, attributed to labor disputes in its US operations.
The potential strike threat by the International Brotherhood of Teamsters union led customers to divert significant shipments to competitors.
UPS CEO Carol Tome revealed that around one million packages daily were shifted to other providers, causing a sales loss of approximately $200 million.
UPS has been prioritizing high-margin parcels, especially in healthcare. The company now projects a 2023 revenue of $93 billion, down from the initial $97 billion estimate.
For the three months ended June 30, UPS generated adjusted profits of $2.54 a share, which was around 2% ahead of expectations.
Noting the downgraded guidance, the logistics giant's stock was marked down $3.26 to $178.69, wiping around $2.8 billion from the value of the business.