United Parcel Service Inc Completes Amazon Business Reduction and Raises Forecast, Yet Shares Drop 6.4%

United Parcel Service Inc released its second-quarter financial results on Tuesday, showing that the company achieved growth in both revenue and profit through a strategic reduction of its low-margin Amazon business. It also raised its full-year earnings guidance. However, due to market concerns about its profitability and future growth prospects, the company's stock still fell about 6.4% in late trading on Tuesday.

The financial report indicates that United Parcel Service Inc's second-quarter revenue reached $22.8 billion, a 7.6% increase year-over-year and exceeding the market's expectation of $21.8 billion. Adjusted earnings per share came in at $1.76, well above the forecasted $1.66. Net profit, however, dropped sharply from $1.28 billion in the same period last year to $604 million, largely due to transformation-related costs.

The core of this performance was the completion of the strategic reduction in the Amazon business. The CEO stated that the company had "successfully completed the planned reduction in Amazon business volume as scheduled." Previously, Amazon's business accounted for more than 13% of the company's revenue, but by the end of the first quarter, that figure had fallen to 8.8%. Although the average daily domestic parcel volume in the U.S. dropped by 3.3%, by focusing on high-value customers like small and medium-sized enterprises and enhancing automation, domestic business revenue still grew by 6% to $14.9 billion, with operating profit rising 21%.

Based on the strong first-half performance, the company has raised its full-year revenue forecast for 2026 to approximately $91.2 billion, and its adjusted earnings per share guidance to about $7.22. Despite this, the market remains concerned about the company's transformation costs and the decline in international business profits. The company recorded an $891 million tax-related after-tax transformation expense for the quarter, and international business operating profit also declined. Additionally, some investors have doubts about the company's ability to sustain its current earnings growth momentum.