United Parcel Service, Inc.

What they do

UPS operates an integrated air and ground network serving more than 200 countries and territories, offering package transportation and delivery plus distribution, contract logistics, ocean freight, airfreight, customs brokerage and insurance. It reports two segments, U.S. Domestic Package and International Package, together called global small package operations, with remaining businesses in Supply Chain Solutions. In 2025 it delivered 5.2 billion packages, and its global healthcare portfolio generated more than $11 billion in revenue.

Revenue drivers

• U.S. Domestic Package — The largest segment, with second-quarter 2026 revenue of $14.9 billion, up 6.0% year over year on a 9.3% increase in revenue per piece; segment operating margin was 0.1% GAAP and 8.0% non-GAAP adjusted.
• International Package — Second-quarter 2026 revenue rose 12.5% to $5.0 billion on an 18.9% increase in revenue per piece, with a 12.4% operating margin on both a GAAP and non-GAAP adjusted basis.
• Supply Chain Solutions — Revenue of $2.9 billion in second-quarter 2026, up 7.8%, driven primarily by growth in forwarding and logistics including healthcare, at a 10.2% operating margin on both a GAAP and non-GAAP adjusted basis.
• Healthcare logistics — The global healthcare portfolio produced more than $11 billion of revenue in 2025, expanded by the Frigo-Trans and Andlauer Healthcare Group acquisitions.

Recent performance

Second-quarter 2026 consolidated revenue was $22.8 billion, up 7.6% year over year, but GAAP operating profit fell 49.0% to $930 million and diluted EPS fell 53.0% to $0.71. GAAP results included $891 million of after-tax transformation charges, or $1.05 per diluted share, mainly employee separation costs from the completed Driver Choice Program; non-GAAP adjusted operating profit was $2.1 billion and adjusted diluted EPS was $1.76. Average daily package volume declined 3.7% to 19.0 million pieces while average revenue per piece rose 11.3% to $15.96. Full-year 2025 revenue was $88.7 billion, down 2.6%, with operating profit of $7.9 billion and diluted EPS of $6.56.

Strategy

UPS is executing a Customer First, People Led, Innovation Driven strategy focused on healthcare, B2B, SMBs and international, while deliberately reducing volume from its largest customer by more than 50% from 2024 levels. It completed the Amazon glide-down and is pursuing Network of the Future, Network Reconfiguration and Efficiency Reimagined initiatives aimed at U.S. Domestic automation and sort consolidation; in the first half of 2026 it closed 45 leased and owned buildings and recorded about $1.1 billion in separation costs. It insourced SurePost as Ground Saver effective January 1, 2025, then agreed in December 2025 to have USPS support final-mile delivery for a portion of Ground Saver and Mail Innovations volumes starting in 2026. Other moves include RFID labeling extended to 5,500 UPS Store locations, a new Philippines air hub slated to open toward the end of 2026, a Hong Kong expansion planned for 2028, and returned cash of $6.4 billion in 2025 through $1.0 billion of buybacks and $5.4 billion of dividends.

Risks

• Macro and trade policy — Evolving trade policies, including pending and enacted tariffs and de minimis exclusions, shifted trade lane volumes and reduced China-to-U.S. volumes, pressuring International Package margins.
• Largest customer concentration — The planned reduction of volume from UPS's largest customer, targeted at more than 50% below 2024 levels, drove average daily package volume down 7.0% in 2025 and 5.7% in the first half of 2026.
• Restructuring execution and costs — The network reconfiguration and workforce reduction programs produced roughly $1.1 billion of separation costs in the first half of 2026 and are expected to lead to further consolidations of facilities, vehicles, aircraft and workforce.
• Cost inflation and operations — Second-quarter 2026 operating expenses rose 12.9% year over year and results reflected higher fuel and network costs arising from the Middle East conflict.

Outlook

Management raised full-year 2026 guidance to consolidated revenue of approximately $91.2 billion, non-GAAP adjusted operating profit of approximately $8.65 billion and non-GAAP adjusted diluted EPS of approximately $7.22. It confirmed expected capital expenditures of about $3.0 billion, dividend payments of around $5.4 billion subject to board approval, and an effective tax rate of approximately 23.0%. The company also stated it received CBP approval for approximately $500 million of IEEPA tariffs paid on entries eligible for refund after the February 2026 Supreme Court ruling invalidating certain IEEPA tariffs.