United Parcel Service CEO Carol Tome defended his company’s long-term strategy on Tuesday after shares tumbled despite estimates in its second-quarter report.
UPS shares fell nearly 7% after the company showed a slowdown in domestic supplies in the three months, leading to a miss in U.S. revenue forecasts.
Tome told CNBC that it was no surprise to the shipping company that the average daily domestic volume in the United States was slightly lower than a year ago.
“There has been a permanent shift in how consumers shop and e-commerce sales are booming, but the growth rate is not the same as it was last year when everyone was in place,” she told Jim Cramer in a “Crazy money“interview.” We realized that when the economy started to open and the stores reopened, consumers would go back into their stores and we saw that happen. ”
US deliveries in the second quarter fell by 3% and the volume of land parcels fell by 4% from the previous year. Revenue per However, the package increased by 13% on US deliveries and was even higher overall. UPS saw strength in foreign markets.
Tome, who began leading the $ 170 billion company in June 2020, said UPS predicted a slowdown in U.S. shipments after SurePost, its housing service, ran 53% of total U.S. volume last year.
While Tome expects the company’s operating margins to ease in the second half of 2021, she told Cramer that this is a seasonal trend for UPS. The operating margin is the percentage of revenue that remains after taking into account costs of goods sold and other costs.
By 2023, the company expects to reach $ 102 billion in revenue – an increase of 20% from 2020 – and an operating margin of 12% in the United States, she said.
“We project volume will increase in the last half of the year, not as much as what we saw in the first half due to the year-on-year comparison, but volume will grow,” Tome said.
“But this is not about another half-year performance, it’s about where we take the company in the long run.”
UPS shares closed Tuesday’s session at $ 195.19, an increase of nearly 16% over the year.
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