Economy bellwether United Parcel Service (NYSE:UPS) reported earnings that topped analysts’ expectations, but were down sharply due to an adjustment for a change in accounting for pension liability. The results also reflected the strong growth the company witnessed in its domestic operations, particularly during the holiday season and the attendant boom in online shopping. International operations, however, were muted and saw slower growth.

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Net income for the quarter was down at $725 million (74 cents per share) compared to the year ago figure of $1.025 billion ($1.02 per share) – principally due to the aforesaid pension adjustment charge of $527 million. Without this charge, profit would have been $1.28 a share, slightly better than the $1.26 expected by analysts.

Revenues were up 6 percent to $14.2 billion, slightly off the analysts’ expectation of $14.4 billion. Benjamin Hartford, a senior research associate at Robert W. Baird in Milwaukee commented that “better-than-expected margins in both domestic and supply chain offset margin weakness in international. But international volume growth, export volumes, were consistent with expectations.”

The company forecasts a 2012 profit target of $4.75 to $5 a share, reflecting growth of 9 to 15 percent over 2011 results, as against $4.80 expected by analysts. The U.S. is expected to contribute significantly here, judged by what Chief Executive Scott Davis said on a conference call: “The U.S. is one of the few economies where expectations are greater than last year.”

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