UPS to reduce Amazon business by 50%, stock tanks 14%

For the full year 2025, UPS expects revenue to be approximately $89 billion, down from $99.1 billion in 2024.

UPS to reduce Amazon business by 50%, stock tanks 14%
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UPS stock plunged a record 14.1 percent to close at $114.90 after it announced plans to reduce its business with Amazon by 50 percent by 2026.

"We've been partnered to Amazon for nearly 30 years, and we hold that company in high regard. Amazon is our largest customer but it's not our most profitable customer. Its margin is very dilutive to the U.S. domestic business. Our contract with Amazon came up this year. And so we said it's time to step back for a moment and reassess our relationship," Carol Tomé, Chief Executive Officer, UPS said during an analysts meet after announcing Q42024 and FY2024 results.

"We considered a number of different options and landed on what we think is the best option for our company, and that is to accelerate the glide down of their volume with us by more than 50 percent by June 2026."

Amazon accounted for 11.8 percent of UPS's total revenue of $91.1 billion for 2024, which translates to roughly $10.7 billion.

2024 results
UPS reported a marginal increase (1.5 percent) in Q42024 revenue at $25.3 billion, and net income of $1.7 billion, up six percent.

"I want to thank all UPSers for their hard work and efforts as we closed out 2024 with an outstanding peak, delivering best-in-class service and strong financial results ahead of our targets for the quarter," says Tomé.

U.S. domestic segment revenue increased 2.2 percent to $17.3 billion, driven by 2.4 percent increase in revenue per piece and increases in air cargo.

The international segment revenue was up seven percent at $4.9 billion on 8.8 percent increase in average daily volume.

Supply chain solutions revenue declined nine percent to $3 billion after the divesture of Coyote, which was partially offset by growth in air and ocean forwarding.

For the full year 2024, net income declined 14 percent to $5.8 billion. The company returned $5.9 billion of cash to shareowners through dividends and share repurchases.

2025 moves
UPS also announced a series of measures including 100 percent insourcing of its UPS Surepost product, reconfiguring its U.S. network and launching multi-year initiatives to drive approximately $1 billion in savings.

"We are making business and operational changes that, along with the foundational changes we’ve already made, will put us further down the path to becoming a more profitable, agile and differentiated UPS that is growing in the best parts of the market," says Tomé.

For the full year 2025, on a consolidated basis, UPS expects revenue to be approximately $89 billion and operating margin to be approximately 10.8%.

The company is planning capital expenditures of about $3.5 billion, dividend payments of around $5.5 billion, subject to board approval, and share repurchases of around $1.0 billion.

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