FedEx Warns on Profits

Updated from 9:16 a.m. EDT

FedEx (FDX Quote) said earnings rose for the just-completed quarter, but the package carrier reduced its forecasts for the current quarter and the full year because of economic uncertainty.

The company encountered "a U.S. economy slowed by a sharp correction in the housing market, financial volatility and high energy costs," said CEO Fred Smith, on a conference call.

The impact was particularly severe at FedEx Freight, owing to the housing market's effect on the less-than-truckload transportation market, he said. Still, strong international results led to profit growth.

FedEx shares traded Thursday at $105.30, down 2.1%.

For the fiscal first quarter ended Aug. 31, the company reported net income of $494 million, up 4% from the same period a year earlier. Per-share earnings were $1.58, and revenue rose 8% to $9.2 billion. Analysts had expected earnings of $1.54 a share on revenue of $9.07 billion.

Looking ahead, FedEx projects earnings of $1.60 to $1.75 a share in the current quarter. Analysts had estimated $1.97. For the full year, the company now expects earnings of $6.70 to $7.10 a share. Analysts had estimated $7.19.

The company reduced its full-year projections by 4% because, "in our earlier guidance, we had expected the economy to improve by late summer or early fall," CFO Alan Graf said on the call. "We now know that is not the case."