A United Parcel Service (UPS) logo is seen on a car in central Warsaw January 16, 2013. REUTERS/Kacper Pempel/File Photo

April 26 (Reuters) – United Parcel Service Inc (UPS.N) reported better-than-expected quarterly results on Tuesday, but shares fell 3% after executives said they expected growth of e-commerce delivery – which has driven its pandemic activity – is cooling this year.

UPS now expects volume at its largest U.S. business to fall in the first half of 2022 before improving in the latter part of the year.

“We’re not going to see the kind of (e-commerce) growth that we’ve seen during COVID, but e-commerce sales will continue to grow,” chief executive Carol Tome said on a conference call with analysts. .

Executives said higher shipping rates, fuel surcharges and more deliveries to large and small businesses would offset weaker demand for residential e-commerce bundle declines – as they did in the first quarter .

Atlanta-based UPS reiterated its 2022 outlook of approximately $102 billion in revenue and an adjusted operating margin of approximately 13.7%. It also announced its intention to double its share buyback target for 2022 to $2 billion. Still, shares fell $5.72 to $183.92 in early trading.

UPS’s results came nearly two weeks after the Commerce Department reported back-to-back declines in e-commerce sales in February and March. Pandemic-weary consumers have shifted some spending from goods to services in response to the United States lifting COVID prevention measures. At the same time, record gasoline prices weighed on disposable income. Read more

During the first quarter, UPS’s average daily domestic business volume fell 3%, due to a 7.4% drop in residential deliveries. Outbreaks of COVID variants, record gas prices and political uncertainty fueled by Russia’s war on Ukraine drove the decline from last year’s stimulus check-fueled volume boom, the leaders said.

Nonetheless, UPS reported first-quarter adjusted earnings of $3.05 a share on revenue of $24.4 billion. Those results beat analysts’ average targets for earnings of $2.88 per share and revenue of $23.78 billion.

Reporting by Kannaki Deka in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Shounak Dasgupta, Anil D’Silva and Lisa Shumaker

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