UPS · 10-Q · 2026Q2 · Full report
Operating Margin Drivers
UNITED PARCEL SERVICE INC · 2026-08-05 · Importance 52 · Surprise 56 · In source text
Consolidated operating profit declined $892 million, or 49.0%, in the second quarter and $1.291 billion, or 37.0%, in the first half of 2026. Consolidated operating margin fell 450 basis points year over year to 4.1% in the quarter and 320 basis points to 5.0% year to date. U.S. Domestic Package operating margin declined to 0.1% from 6.5% in the quarter and to 1.8% from 6.6% year to date, primarily because of Driver Choice separation costs, USPS outsourcing fees, higher fuel and transportation costs, and lower volume. International Package operating margin fell to 12.4% from 15.0% in the quarter and to 12.2% from 14.8% year to date, as Middle East conflict disruptions increased fuel, charter and aircraft-maintenance costs.
Key facts
- We expect to achieve approximately $3 billion in full year 2026 benefits from Network Reconfiguration and Efficiency Reimagined initiatives. source
- Consolidated operating profit for the six months ended June 30, 2026 was $2,197 million versus $3,488 million in 2025, a decrease of $1,291 million or 37.0%. source
- Consolidated operating profit for the three months ended June 30, 2026 was $1,822 million compared with $(892) million (a decline of $49.0%) in 2025. source
- Net income was $1,468 million for the six months ended June 30, 2026 and $2,470 million for the six months ended June 30, 2025. source
- Operating margin for the three months ended June 30, 2026 was 4.1% versus 8.6% in 2025, a decrease of 450 basis points. source
- Operating margin for the six months ended June 30, 2026 was 5.0% versus 8.2% in 2025, a decrease of 320 basis points. source
- U.S. Domestic Package operating margin for the three months ended June 30, 2026 was 0.1% versus 6.5% in 2025. source
- U.S. Domestic Package non-GAAP adjusted operating margin for the three months ended June 30, 2026 was 8.0% versus 7.0% in 2025. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | positive | realized | +11.9% | Consolidated operating profit for the three months ended June 30, 2026 was $1,822 million compared with $(892) million (a decline of… |
| operating_income | positive | probable | +6.6% | We expect to achieve approximately $3 billion in full year 2026 benefits from Network Reconfiguration and Efficiency Reimagined initiatives. |
| operating_income | negative | realized | -5.7% | Consolidated operating profit for the six months ended June 30, 2026 was $2,197 million versus $3,488 million in 2025, a decrease of… |
| net_income | negative | realized | -4.4% | Net income was $1,468 million for the six months ended June 30, 2026 and $2,470 million for the six months ended June 30, 2025. |