Despite ongoing cost-cutting efforts, UPS is facing declining volumes in the US market, with tariff uncertainty adding to the pressure.
United Parcel Service (NYSE: UPS) reported Q2 FY2025 revenue of 21.2 billion USD, a non-GAAP operating margin of 8.8%, and non-GAAP EPS of 1.55 USD. Revenue exceeded analyst forecasts (20.87 billion USD), but earnings per share came in slightly below expectations (1.57 USD).
Weakness in the quarter’s financial performance was driven by lower volumes and higher delivery costs in the US, as well as a drop in revenue in the Supply Chain Solutions segment, mainly due to the sale of Coyote in 2024. The international business presented a brighter picture, with revenue up 2.6% to 4.49 billion USD and average daily volume up 3.9% year-on-year. Management reaffirmed its plan to achieve around 3.5 billion USD in cost savings in 2025. However, the company refrained from providing revenue and operating profit guidance, citing macroeconomic uncertainty and trade policy headwinds affecting cross-border flows. UPS also confirmed that it plans to pay dividends of approximately 5.5 billion USD and that it completed a 1 billion USD share buyback.
The market reacted very negatively to the report: the share price dropped nearly 10% immediately and continued to decline in the following days, hitting new annual lows. Investors focused less on the small miss against EPS forecasts and more on underlying issues such as declining domestic US volumes (especially in premium products) and a collapse in US–China corridor traffic, which directly impacted margins. Adding to the negative sentiment was the lack of updated full-year guidance, which market participants interpreted as a signal of high business uncertainty and management’s doubts about stabilisation in the second half. As a result, many investors and analysts revised their models downwards, increasingly viewing UPS as a dividend-oriented value stock with heightened risks of future payout cuts. This shift explains the sharp fall in market capitalisation.
This article examines United Parcel Service, Inc., outlines the sources of its revenue, reviews UPS’s performance in Q1 and Q2 FY2025, and sets out expectations for calendar 2025. It also provides a technical analysis of UPS shares, forming the basis for a UPS stock forecast for 2025.
United Parcel Service (UPS) is the world’s largest logistics and courier company, specialising in freight and parcel delivery as well as logistics solutions. Founded in Seattle, US, by James E. Casey and Claude Ryan in 1907 as the American Messenger Company, it was renamed United Parcel Service in 1919 as operations expanded beyond Seattle. Its initial public offering took place on 10 November 1999 on the New York Stock Exchange under the ticker UPS. The company provides express parcel delivery across the US and globally, along with international logistics, contract logistics, supply chain management, and specialised solutions for a range of industries, including e-commerce, healthcare, and manufacturing. It is headquartered in Atlanta, Georgia. UPS’ primary competitors include FedEx (NYSE: FDX) and DHL (XETR: DHL), part of the Deutsche Post Group, along with regional and local delivery operators, including national postal services and new market entrants such as Amazon Logistics.
Image of the company name United Parcel Service, Inc.UPS’s business model is built around a wide range of logistics and transportation services. The company’s revenue is derived from the following key segments:
Thus, UPS generates revenue through a diversified portfolio of logistics services, serving both the mass segment (retail clients) and the large corporate sector with tailored supply chain solutions.
On 23 April 2025, UPS published its results for Q1 fiscal 2025, which ended on 31 March 2025. Below is its key financial data compared to the corresponding period of last year:
Revenue by segment:
UPS’ Q1 fiscal 2025 report demonstrated the company’s agile adaptation to external challenges and its focused efforts to enhance operational efficiency and maintain profitability. With revenue down 1% to 21.5 billion USD, non-GAAP adjusted EPS was 1.49 USD, exceeding the consensus forecast by over 8%, confirming the stability of key business areas.
CEO Carol Tomé noted that UPS is undertaking the largest transformation of its logistics network in the company’s history, with plans to save 3.5 billion USD this year by closing 73 facilities and laying off 20,000 employees. This move enables the company to offset lower volumes, including a decline in orders from Amazon and tariff pressure on international shipments. UPS is adapting its structure to meet current demand, becoming more compact and efficient.
Although management did not update its full-year 2025 outlook due to macroeconomic uncertainty, particularly relating to tariffs, it provided guidance for Q2. Revenue is expected to reach 21 billion USD, with US parcel delivery volumes projected to decline by 9%. International margins are anticipated to remain in the mid-double-digit range (percentage terms). Margins in the US delivery segment are also forecast to rise by 30 basis points, supported by the impact of restructuring.
UPS is prioritising strict cost optimisation over revenue growth, and its Q2 guidance reflects a realistic, cautious stance amid ongoing uncertainty. If the company succeeds in implementing the planned 3.5 billion USD in savings, including potential further restructuring, it could emerge from the current cycle significantly more profitable and resilient.
On 29 July 2025, UPS released its results for Q2 FY2025, which ended on 30 June 2025. The key financial metrics compared with the same period last year are as follows:
Revenue by segment:
UPS reported Q2 FY2025 revenue of 21.2 billion USD and non-GAAP EPS of 1.55 USD. Sales exceeded analyst forecasts, but earnings came in slightly below consensus.
In the US, results were weaker: revenue declined, parcel volumes fell by 7%, and per-parcel delivery costs increased, weighing on margins. The international business presented the opposite picture: volume growth of nearly 4% and a profitability level of around 15% made this segment the strongest performer. The Supply Chain Solutions division was impacted by the sale of Coyote a year earlier, leading to lower revenue. Free cash flow for the first half of the year was 742 million USD – sufficient to cover dividends and investment, while the company continues to build resilience through cost savings.
The main weak spots for UPS are declining volumes in the US, rising per-parcel costs, and the lingering impact of the Coyote divestment. Additional pressure comes from new tariffs on low-value parcels from China, which are weighing on budget marketplaces and last-mile delivery.
On the positive side, UPS maintains high margins in its international segment and is firmly implementing its optimisation program, which is expected to deliver around 3.5 billion USD in cost savings in 2025. The company is also reducing reliance on Amazon, accepting lower volumes in exchange for improved profitability.
UPS does not provide quarterly guidance but reaffirmed its full-year 2025 plan – capital expenditure of around 3.5 billion USD, dividends of approximately 5.5 billion USD, and pension contributions of about 1.4 billion USD.
Below is the fundamental analysis of UPS following the Q2 FY2025 results:
Conclusion of the fundamental analysis of UPS: the company’s financial position can be rated above average thanks to high liquidity and moderate leverage. However, dividend coverage from operating cash flow is marginal, and the buyback program for the year has been completed, effectively funded by borrowing. A share price of 84 USD looks justified if the cost-saving program is delivered and volumes stabilise in H2. If this program is not implemented, dividends will continue to be funded from the balance sheet, increasing the company’s sensitivity to interest rates and credit market conditions and placing further pressure on the UPS share price.
On the weekly chart, UPS shares have been trading within a downward channel since early 2022 and have now reached the lower boundary, which acts as a support level. In addition, a convergence has formed on the MACD indicator, signalling the potential for an upward move in UPS’s share price. Based on the current performance of United Parcel Service shares, the two possible forecast scenarios for 2025 are as follows:
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Investing in UPS stock entails several risks that may negatively impact its revenue and financial performance. The primary ones include:
Thus, despite its status as the industry leader, UPS is subject to a variety of factors that may limit the company’s growth or reduce its financial resilience
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.