UPS raises annual forecasts as higher-paying shipments boost margin

Oct 27 (Reuters) - United Parcel Service UPS.N raised its annual revenue and profit forecasts on Tuesday, banking on higher-margin international air shipments after deciding to cut millions of lower-margin deliveries for its largest customer, Amazon.com AMZN.O.

The world's largest parcel delivery company, widely viewed as an early indicator of global economic activity, has been focused on more lucrative shipments as it also works to slash $3 billion in costs this year by closing facilities and cutting jobs.

Rival FedEx FDX.N, which reports results on Wednesday, is using a similar playbook. Both companies are under pressure from investors to show progress toward improving margins by focusing on higher-value shipments.

Shares of UPS climbed 1.8% in premarket trading, while FedEx's stock was up 0.6%.

Atlanta-based UPS now expects 2026 adjusted profit of around $7.28 per share, compared with $7.22 it had forecast in July. Analysts expect the company to report a profit of $7.19 per share, according to data compiled by LSEG.

The company expects annual revenue of $92.6 billion, compared with its previous projection of $91.2 billion.

For the third quarter, UPS posted an adjusted profit of $1.69 per share, down from $1.74 per share the year before.