UPS sees profit, revenue decline but promises ‘inflection’ ahead in 2026

The Sandy Springs-based global logistics giant saw its net income decline 27% in the first quarter year over year to $864 million. Revenues came in at $21.2 billion, slightly below that of the first quarter of 2025.

But the back half of 2026 will be the “inflection” in UPS’ ongoing strategy shift that has seen the company drastically cut its relationship with Amazon, previously its largest customer, Tomé told investors on a Tuesday morning call.

Amazon represented less than 9% of total revenue at the end of March, she said, down from more than 13% “not very long ago.”

The company has been on a long-term plan to increase automation across its network and move away from less profitable e-commerce volumes and expand into more complex, profitable logistical offerings including healthcare and e-commerce returns. It saw revenues per package shipped increase year over year.

“We’re overturning the old industry assumption that scale alone drives profitability,” Tomé told investors.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

Chief Financial Officer Brian Dykes told investors the company is “on track” to meet billions in targeted expense reductions prompted by the Amazon cutback.

The company closed another 23 buildings in the first quarter with 27 more to go in 2026, Dykes said.

It has cut nearly 25,000 operational jobs year over year, he said. And a first-of-its-kind voluntary driver buyout program is set to reduce its driver workforce by another 7,500.

While Teamsters union leadership and local chapters have been fighting the program, Tomé said it was “oversubscribed” and they had to turn down some drivers who applied.

On top of a major network shift, the company has also been managing big effects from the Trump administration’s tariffs.

Tomé told investors some trade lanes are starting to “normalize,” however, in the wake of a global 10% tariff that went into effect in February.

“As we have said before, with changes in trade policies, we see that trade doesn’t stop. It moves somewhere else,” Dykes said.

When it comes to the much-anticipated refunds after the U.S. Supreme Court voided one of the administration’s tariffs, Tomé made clear that the company intends to pass along any refunds it receives from the government back to customers in their entirety, interest included.

“It is not our intent to make any money on this. We’re just a pass through,” she said.

Of the $166 billion in tariffs that have been collected by the U.S. government, Tomé said UPS remitted more than $5 billion of it and has begun applying for those refunds.

The government is moving forward with “last in, first out” on refund timing, she said.

UPS and FedEx have both been hit with class-action lawsuits from customers related to their tariff collections.

FedEx in turn sued the U.S. government itself demanding tariff refunds. Tomé said on the earnings call that UPS’ approach was “to work with the U.S. government and not to sue the U.S. government.”

When it comes to the spike in fuel costs from the war in Iran, Tomé told investors it was “too early in the conflict” to predict a long-term impact, though the company has added fuel surcharges to manage the new costs.

“These external pressures won’t deter us” from the long-term plan, she said.

Credit: Jason Getz/AJC

Credit: Jason Getz/AJC

‘The long game’

As Wall Street has absorbed the company’s strategy shift, UPS’ stock price is down nearly a third since this time in 2024.

But the company is “really trying to play the long game here,” Tomé told the AJC.

“As CEO, we sit at the intersection of every contradiction. And one of those contradictions is short-term performance versus long-term strategy,” she said.

The company is “leaning into the right parts of the market,” she said.

For example, UPS’ healthcare division saw its first $3 billion revenue quarter ever in 2026, she highlighted.

Its “digital access program” for small and medium-sized businesses has increased more than tenfold since she took the helm of the company six years ago, she noted.

“No one is more disappointed about this, the share price, than I am,” she noted.

“But if we continue to stay on strategy, if we take care of our people, our customers, and play the long game, the stock is going to take care of itself.”