UPS cuts 34,000 jobs in the year to date as its turnaround continues

United Parcel Service reported third-quarter adjusted EPS of $1.74 and revenue of $21.42 billion, both significantly exceeding analyst expectations, which drove a more than 7% rise in shares. The company detailed its ongoing turnaround strategy, including approximately 48,000 job cuts and 93 facility closures, as it strategically reduces its reliance on Amazon shipments by over 50% by mid-2026. These aggressive cost-cutting measures have already generated $2.2 billion in savings, with $3.5 billion anticipated by 2025, underscoring a significant operational restructuring aimed at enhancing profitability.

Analysis

United Parcel Service reported robust third-quarter results, with adjusted EPS of $1.74 significantly exceeding analyst estimates of $1.31 and revenue of $21.42 billion surpassing the $20.84 billion forecast. This strong performance, despite a year-over-year decline from $1.80 EPS, propelled UPS shares up more than 7% in afternoon trading, indicating positive market reception to the company's strategic direction.

The company's ongoing turnaround strategy is characterized by aggressive cost-cutting and operational restructuring, including approximately 48,000 job cuts (34,000 operational, 14,000 management) and the closure of 93 facilities. These measures have already generated $2.2 billion in cost savings as of September 30, with a projected $3.5 billion in total year-over-year savings anticipated by 2025.

A pivotal element of this strategy is the deliberate reduction of reliance on Amazon shipments, with UPS targeting a volume decrease of over 50% by the second half of 2026 following a reassessment of their long-standing partnership. This strategic pivot aims to optimize network utilization and focus on more profitable business segments, underscoring a proactive approach to enhancing long-term profitability.

Key Decisions for Investors

• Investors should closely monitor UPS's execution against its $3.5 billion cost savings target for 2025, as this is a key driver for margin improvement.
• Evaluate the company's ability to offset the planned reduction in Amazon volume with higher-margin business to ensure sustained revenue growth.
• Observe future announcements regarding additional facility closures and management restructuring, which could signal further operational efficiencies and impact long-term profitability.