Updated Version 3 - Resend - UPS Raises Annual Performance Forecast, High-Margin Package Business Drives Quarterly Profit Above Expectations

Analyst comments added in paragraph 7, stock price update in paragraph 8

Reuters, October 27 - United Parcel Service (UPS, UPS.N) on Tuesday raised its annual revenue and profit outlook after its quarterly results beat market expectations, thanks to growth in high-margin international air shipping and a reduction in low-margin delivery business for Amazon.com.

The world’s largest package delivery company, widely seen as a bellwether for global economic activity, said it is on track to reach its $3 billion cost savings target this year as planned.

As the company scales back millions of doorstep deliveries for its largest client, Amazon AMZN.O, it has continued to close multiple facilities and cut thousands of jobs.

Rival FedEx (FDX.N) is set to report earnings on Wednesday and has taken a similar approach. Both companies face investor pressure to demonstrate profit margin improvement by focusing on high-value parcel businesses.

UPS appears to be benefiting from these measures. The U.S. domestic package segment, which accounts for 60% of UPS’s total revenue, saw its quarterly adjusted operating profit margin rise to 7% from 6.4% previously.

The smaller but more profitable international package segment also reported that adjusted operating margin in the third quarter reached 14.9%, up from 14.8% a year ago.

Evercore ISI analyst Jonathan Chappell said in a report that these results provide some confidence in the “sustainability of profitability,” noting that volume growth drove the U.S. domestic business while cost optimizationboosted the international segment.

UPS shares rose 1.3% in pre-market trading, while FedEx shares were flat.

The Atlanta-based delivery giant now expects adjusted earnings per share of about $7.28 in 2026, up from its July forecast of $7.22. According to data compiled by LSEG, analysts expect earnings per share of $7.19.

The company expects full-year revenue of $92.6 billion, above its prior forecast of $91.2 billion and analysts' estimate of $91.73 billion.

In the third quarter, UPS reported adjusted earnings per share of $1.69, down from $1.74 a year earlier but above analysts’ forecast of $1.63.

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