UPS raises full-year outlook as Amazon volume reduction strategy yields margin gains

United Parcel Service reported second-quarter revenue of $22.83 billion and adjusted earnings per share of $1.76, surpassing analyst consensus estimates. The company raised its full-year 2026 revenue outlook to approximately $91.2 billion and adjusted earnings per share to $7.22, signalling confidence in its ongoing operational restructuring.

A key milestone in the quarter was the completion of the company’s planned reduction in lower-margin Amazon package volume. This strategic shift, announced 18 months prior, saw Amazon’s contribution to UPS revenue fall from a peak of over 13% to 8.8% by the end of the first quarter. Management described the move as a necessary step to make the network smaller before making it more profitable.

In the U.S. Domestic segment, average daily package volume declined by 3.3%, yet revenue rose 6% and adjusted operating profit increased 21%. This performance lifted the segment’s adjusted margin to 8% from roughly 7% a year earlier, driven by a 9.3% increase in revenue per piece that outpaced an 8% rise in adjusted cost per piece.

The broader consolidated figures reinforced the trend, with revenue growing 7.6% and adjusted operating profit increasing 12% to $2.10 billion. The company expects to incur between $1.3 billion and $1.5 billion in transformation costs for the full year as part of a broader network reconfiguration, targeting $3 billion in benefits by 2027.

International results presented a mixed picture, with revenue increasing 12.5% but adjusted operating profit falling 8.7% and margin declining to 12.4% from 15.2%. Analysts note that while the domestic margin improvement is significant, it remains well below the International segment’s historical levels, and investors will monitor whether pricing power can be sustained as fuel surcharges and restructuring charges normalise.