UPS Falls 7% After Warning of Iran War Fuel Risk
UPS shares fell up to 7% after CEO Carol Tomé warned that high fuel prices from the Iran war could hurt demand later this year. The company maintained its full-year revenue target and expects a return to growth in Q2.
Key Numbers
Shares of UPS (NYSE: UPS) fell as much as 7% on Tuesday after CEO Carol Tomé warned that high gasoline prices stemming from the war in Iran could potentially impact demand toward the end of the year.
Key Financial Results
| Metric | Value |
|---|---|
| Stock Decline | Up to 7% |
| Full-Year Revenue | Target Maintained |
| Quarterly Profit | Fell but Beat Expectations |
Highlights from the Call
- UPS adds a fuel surcharge on packages shipped by truck and air, protecting profits from price spikes.
- However, executives noted that while surcharges boost revenue, costs are also higher, so it does not result in a windfall.
- UPS and rival FedEx (NYSE: FDX) have been handling fewer packages due to changing U.S. trade policies, notably tariffs on goods from China.
- UPS separately decided to deliver fewer packages for Amazon, its largest customer, to weed out low-profit work.
Guidance
UPS expects a return to revenue and profit growth starting in the second quarter, driven by a shift to premium, higher-paying shipments and cost cuts.
Impact on Stock
The stock dropped 7% in morning trading, reflecting investor concerns about fuel price impacts on demand.
What This Means for Investors
Despite headwinds, UPS maintains its annual guidance and expects improvement in Q2, but geopolitical risks remain a key factor for the stock.
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