In the first quarter of 2024, United Parcel Service (UPS) reported a decrease in revenue of $1.2 billion, or 5.3%, compared to the same period in 2023. The operating profit also declined by $928 million, or 36.5%, and the operating margin dropped from 11.1% to 7.4%. Net income for the quarter was $1.1 billion, a decrease of 41.3% from the previous year, and diluted earnings per share fell by 40.6% to $1.30.
The average daily package volume in UPS's global small package operations decreased by 3.6%, with declines in both commercial and residential shipments across all product segments. This was primarily attributed to challenging macroeconomic conditions. Revenue per piece also saw a slight decrease of 0.1% to $13.73.
The U.S. Domestic Package segment experienced declines in average daily package volume across all service categories. Next Day Air, Deferred, and Ground volumes dropped by 8.5%, 8.1%, and 2.3% respectively. Average revenue per piece for Next Day Air and Deferred services increased by 4.4% and 7.0% respectively, while Ground services saw a decrease of 1.2%.
The segment's revenue decreased by 5.0%, with Next Day Air, Deferred, and Ground revenues declining by 5.9%, 3.2%, and 5.0% respectively. Operating expenses decreased by 0.8%, primarily due to reductions in transformation costs and asset impairment charges. The segment's operating profit and operating margin also decreased significantly, by 43.7% and 43.6% respectively.
Internationally, UPS's International Package segment saw declines in demand-related surcharges and currency fluctuations, partially offset by revenue per piece growth due to increases in base rates and changes in product and customer mix.
In the Supply Chain Solutions segment, revenue decreases were driven by volume and market rate declines in Forwarding, partially offset by growth in logistics businesses. Expenses decreased primarily due to lower purchased transportation expenses in Forwarding, partially offset by expense increases within Logistics.
UPS also provided supplemental information on non-GAAP financial measures, excluding costs or charges considered unrelated to underlying business performance. Adjusted financial measures revealed transformation and other costs of $86 million and asset impairment charges of $48 million for the first quarter of 2024.
The company also highlighted its ongoing investment in technology and network efficiency, including initiatives such as the expansion of its no box, no label returns service and the launch of Roadie XD for big and bulky long-zone deliveries.
Looking ahead, UPS anticipates a lower second quarter earnings relative to 2023, primarily due to higher labor costs associated with the first year of the Teamsters contract. However, the company expects a return to operating profit growth during the second half of 2024. As a result of these announcements, the company's shares have moved -0.5% on the market, and are now trading at a price of $146.43. For more information, read the company's full 10-Q submission here.
