UPS (UPS-0.84%) said Tuesday that it would cut 20,000 jobs this year and shutter 73 facilities after significantly scaling back its delivery partnership with Amazon (AMZN-0.68%) — previously its largest customer accounting for 12% of revenue.
The shipping giant had announced plans earlier this year to begin downsizing its partnership with Amazon. UPS’s disclosure of the coming job cuts came in its first-quarter earnings release Tuesday morning.
“Amazon is our largest customer, but it’s not our most profitable customer,” UPS chief executive Carol Tomé said earlier this year on a call with analysts. “Its margin is very dilutive to the U.S. domestic business.”
The company, which employs almost 490,000 people — 330,000 of them unionized under the Teamsters — said the job cuts are part of a broader network reconfiguration aimed at aligning its facilities and workforce with lower package volumes. Tomé said the moves were well-timed given ongoing macroeconomic uncertainty, but declined to update the company’s full-year outlook.
UPS stock was down slightly in premarket trading Tuesday.
The shipping company reported a mixed bag of results in its latest earnings report on Tuesday, notching $21.5 billion in first-quarter revenue — down slightly from last year. But it managed to grow operating profit 3.3% to $1.7 billion. On an adjusted basis, operating margin rose to 8.2%, and adjusted EPS climbed 4.2% year-over-year to $1.49. Net income came in at $1.19 billion.
Despite a drop in overall volume, U.S. domestic revenue rose 1.4% thanks to a 4.5% increase in revenue per piece and continued strength in air cargo demand. International volume surged 7.1%, lifting that segment’s revenue 2.7%, though margin pressures overseas and in supply chain solutions remained a big drag.
—Catherine Baab contributed to this article.
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