UPS pulls full-year guidance amid Covid-19 uncertainty

UPS pulled its full-year guidance on Tuesday, after first-quarter income was dented by the Covid-19 pandemic and the introduction of lockdown measures.

The US deliveries giant said revenues for the three months to March end were $18.0bn, up on the $17.16bn reported a year earlier. But net income eased to $965m from $1.11bn, while diluted earnings per share were $1.11 compared to $1.28 in 2019.

UPS is seen as a critical infrastructure business and is continuing to operate during the pandemic. It said that first-quarter revenues had been driven in growth in in both business-to-consumer shipments, and gains in healthcare.

But net income was hit by “material headwinds due to disruptions from the coronavirus pandemic, higher self-insurance accruals and other items”.

Looking forward, UPS said it was no longer able to “reasonably estimate” its operating performance in future quarters. “As a result, the company is withdrawing its previously issued 2020 revenue and diluted earnings per share growth guidance,” it added.

It will also look to reduce capital expenditure by around $1bn from previous estimates, and is suspending share buybacks for the year.

Brian Newman, chief financial officer, said: “We will continue to adapt through this challenging period and prioritize investments and operational decisions that put UPS in the best financial position.

“We take a discipline and balanced approach to capital allocation and are confident in our liquidity position, including our commitments to capital management and dividends.”