Large-scale layoffs reduce costs effectively, UPS's Q3 earnings exceed expectations.

United Parcel Service (UPS.US) released its latest financial report before the market opened on October 28th (Tuesday), showing that its cost-cutting measures and mass layoffs of 34,000 employees have been effective, stimulating profits significantly exceeding Wall Street expectations and causing the stock price to surge. Financial data shows that UPS adjusted earnings per share reached $1.74 in the third quarter, far surpassing analysts' average forecast of $1.32; revenue performance also exceeded market expectations, with revenue of $21.4 billion in the third quarter, compared to the market estimate of $20.87 billion. The company further predicts that fourth-quarter revenue will reach approximately $24 billion, slightly higher than previous expectations. The scale of layoffs targeting operations personnel (including drivers and package handlers) has been expanded by 70% from the original target as part of a comprehensive cost reduction plan. The company also announced that it will close the daily operations of 93 leased and self-owned buildings by 2025. The revitalization strategy of CEO Carol Tome has shown results after facing challenges such as slowing demand, high costs, and uncertainties in international trade caused by tariff policies. Amid the impact of the Trump administration's trade policies, the parcel industry has faced significant pressure this year, and UPS's performance is seen as a key turning point. Matt Maley, Chief Market Strategist at Miller Tabak, points out that signs of a turnaround in stock prices after years of decline "should eventually reverse the trend." As of the time of writing, UPS's stock price has increased by 12% before the market opening, leading to a simultaneous rise in the stock price of competitor FedEx Corporation (FDX.US). It is worth noting that as of October 27th, UPS's stock price has fallen by 29% this year. In the turbulent trade environment, the most profitable TRADING route for the two parcel giants, UPS and FedEx Corporation, has been impacted. FedEx Corporation expected losses of $1 billion this year in September. UPS plans to achieve cost reduction and efficiency improvement through the removal of low-profit businesses (such as Amazon.com, Inc.'s low-value e-commerce goods), closure of integrated facilities, and promotion of automation deployment. The company also faces the issue of high hourly labor costs, partly due to labor contracts with 330,000 members of the International Brotherhood of Teamsters. It is understood that UPS's cost-cutting plan has saved approximately $2.2 billion in the first nine months of this year, and the company expects to save a total of $3.5 billion year-on-year by 2025. Despite the strong quarterly performance, Mark Malik, Chief Investment Officer at Siebert Financial, cautions that a single outstanding financial report "may not be enough to reverse the long-term decline" before the implementation of tariff policies, the company's growth was already weak, and increased industry competition and the continued impact of artificial intelligence on supply chain optimization continue to put pressure. Translated with www.DeepL.com/Translator (free version)