[1/4]UPS vehicles are seen at a facility in Brooklyn, New York City, US, May 9, 2022. REUTERS/Andrew Kelly/File Photo Obtaining licensing rights
Sept 12 (Reuters) – United Parcel Service (UPS.N)’s new five-year deal with Teamsters-represented workers will cost less than the $30 billion set by the union, executives said on Tuesday.
The contract covers about 340,000 UPS workers in the United States and will increase wage and benefit costs at a compound annual growth rate of 3.3% over the term of the agreement that ends in 2028.
“Our accounts were definitely less than $30 billion,” Chief Financial Officer Brian Newman told Reuters, repeating what CEO Carol Toomey said in an earlier interview with CNBC. Both of them refused to link the value of the dollar to the contract.
The company previously said 46% of wage and benefit costs will be withheld from the agreement this year.
While costs related to the contract in the second half of 2023 are expected to be about $500 million higher than UPS expected, the impact of the entire contract is “fully in line” with the company’s assumptions, Newman said.
Last month, the Atlanta-based company cut its full-year revenue and profitability goals, citing higher-than-expected labor costs as well as business lost during tumultuous contract talks with the International Brotherhood of Truck Drivers.
UPS shares fell 2.4%.
(Reporting by Priyamvada C and Paranjot Kaur in Bengaluru; Reporting by Mohammed for the Arabic Bulletin) Editing by Varun Hong Kong, Anil D’Silva and Nick Zieminski
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