(Bloomberg) -- United Parcel Service Inc. fell after warningthat it may have to take a charge of as much as $3.8 billionrelated to a potential pension-fund obligation.

|

Read: Strong market not saving S&P pensionfunded status

|

The shares dropped as much as 2.3 percent, the biggest intradaydecline since Jan. 20. The stock pared the loss, trading less than1 percent lower to $105.95 at 10:47 a.m. in New York.

|

Read: NYC pension votes to scrap hedgefund

|

The U.S. Treasury Department is considering approving benefitcuts to the Central States Pension Fund to keep the multi-employerplan solvent. UPS pulled out of the fund in 2007 but agreed to makeup any losses its remaining members experienced.

|

The Atlanta-based company may have to record a charge of $3.2billion to $3.8 billion if the government approves the benefitcuts, executives said on a conference call after reporting earningsThursday. UPS plans to oppose such a move by the Treasury.

|

Read: PBGC says multiemployer premiums must goup

|

“The market is reacting to the size of the potential liabilityand concern about the unknown impact to future numbers,” said DavidVernon, an analyst at Sanford C. Bernstein & Co. “I think it’soverdone. This is an issue that’s going to be resolved in thecourts regardless of what Treasury decides.”

|

UPS reported that earnings excluding items rose to $1.27 ashare, beating the $1.22 average of analyst estimates compiled byBloomberg. Revenue increased 3.2 percent to $14.4 billion,the Atlanta-based company said in a statement. Analysts hadpredicted $14.6 billion.

|

Executives attributed the higher earnings in part to a 15percent increase in operating profit in its European unit. A 6percent gain in business-to-consumer shipments helped propel U.S.domestic revenue up 3.1 percent.

|

UPS had fewer disruptions to its air and road network in thefirst quarter than in previous years that were plagued with costlystorms. The company also has been partly insulated from a slowdownin U.S. freight volume because of a growing reliance on e-commerce,said Kevin Sterling, an analyst at BB&T CapitalMarkets.

|

UPS fared well during the peak holiday season in November andDecember, delivering its crush of packages ahead of Christmas.Chief rival FedEx Corp. was criticized for failing to beat theholiday deadline in some instances.

|

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.