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UPS to cut 12,000 jobs five months after reaching union deal

Shares of UPS fell on Tuesday as the package delivery company gave a weaker-than-expected full-year revenue forecast (Richard Drew/AP)
Shares of UPS fell on Tuesday as the package delivery company gave a weaker-than-expected full-year revenue forecast (Richard Drew/AP)

UPS will cut 12,000 jobs and released a revenue outlook for this year that sent its shares down sharply.

The company also hinted that its Coyote truck load brokerage business may be put up for sale. UPS acquired the Chicago-based company for 1.8 billion dollars (£1.42 billion) in 2015.

The Teamsters in September voted to approve a tentative contract agreement with UPS, putting a final seal on contentious labour negotiations that threatened to disrupt package deliveries for millions of businesses and households nationwide.

The contract includes pay raises for full and part-time union workers, the creation of 7,500 full-time jobs and the filling of 22,500 open positions, allowing more part-timers to transition to full-time.

On a conference call Tuesday, chief executive Carol Tome said that by reducing the company’s headcount UPS will realise a billion dollars in cost savings. The job losses are anticipated to be among management roles and contractors, the company said.

UPS also said on Tuesday that its board approved an increase of one cent in its quarterly dividend to shareholders of record on February 20.

“We are going to fit our organisation to our strategy and align our resources against what’s widely important,” Ms Tome said.

Ms Tome said UPS is ordering employees to return to the office five days a week this year.

United Parcel Service Inc. anticipates 2024 revenue in a range of approximately 92 billion to 94.5 billion dollars (£73 to £74.6 billion), short of Wall Street’s expectations for a figure above 95.5 billion dollars (£75.4 billion).

Shares of UPS dropped nearly 8% on Tuesday.

Revenue also came up short in the fourth quarter, sliding 7.8% to 24.92 billion dollars (£19.7 billion). That’s just shy of Wall Street projections for 25.31 billion dollars, according to a poll of analysts by FactSet.

Profits for the quarter ended in December slid by more than half to 1.61 billion dollars (£1.27 billion), or 1.87 dollar per share, from 3.45 billion dollars, or 3.96 dollars per share. On an adjusted basis, quarterly earnings per share totalled 2.47 dollars, a penny above the average estimate, according to FactSet.