UPS Q4 Revenue Dips In Key Segments, Raises Dividend, Issues Sub Par 2024 Outlook

United Parcel Service Inc UPS reported a fourth-quarter fiscal 2023 revenue decline of 7.8% year-over-year to $24.92 billion, missing the consensus of $25.43 billion. 

Adjusted EPS was $2.47, down from $3.62 in Q4 2022, in line with the consensus.

Consolidated operating profit was $2.5 billion, down 22.5% Y/Y, and down 27.1% on an adjusted basis.

U.S. Domestic Segment revenue fell 7.3% Y/Y to $16.92 billion, driven by a 7.4% decrease in average daily volume. The adjusted operating margin stood at 9.3%.

International Segment revenue decreased by 6.9% Y/Y to $4.61 billion, owing to an 8.3% decrease in average daily volume primarily due to softness in Europe. The adjusted operating margin was 19.5%.

Supply Chain Solutions Segment revenue decreased by 11.4% due to market rate declines and excess market capacity in forwarding, and the adjusted operating margin was 9.4%.

UPS’ operating cash flow for the fiscal year totaled $10.24 billion, and free cash flow was $5.25 billion.

Dividend: The Board approved a $0.01 increase to the company’s quarterly dividend. UPS will pay a first-quarter 2024 dividend of $1.63 per share on all outstanding Class A and Class B shares. The dividend is payable on March 8, 2024, to shareowners of record on February 20, 2024.

2024 Outlook: UPS expects revenue of $92 billion-$94.5 billion versus $95.57 billion consensus; and sees consolidated adjusted operating margin of 10%-10.6%.

UPS expects 2024 capital expenditures of about $4.5 billion and dividend payments of around $5.4 billion.

Price Action: UPS shares are trading lower by 6.77% at $147.32 premarket on Tuesday.

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