May 9 (Bloomberg) -- FedEx Corp., the second-largest U.S. package-shipping company, said fourth-quarter profit will miss its forecast after surging fuel prices raised costs by at least $100 million more than estimated.

FedEx will earn $1.45 to $1.50 a share in the quarter ending May 31, compared with its previous target of $1.60 to $1.80, the Memphis, Tennessee-based company said today in a statement. The shares fell 3.3 percent after FedEx said the slower U.S. economy is curbing express and freight shipments.

The rising price of oil, which set records every day this week, forced FedEx to cut its earnings forecast for the second time this fiscal year. Fuel costs, coupled with a possible recession in the U.S., are taking a toll on industries from airlines to delivery companies whose profits are more sensitive to economic downturns. United Parcel Service Inc., the largest U.S. shipper, last month lowered its forecast as well.

``People have dialed down their actual business flow expectations,'' Dan Ortwerth, an analyst at Edward Jones & Co. in St. Louis who rates both companies as a ``buy,'' said in an interview. ``This was right about the same magnitude as UPS's announcement. The whole fuel situation is really a moving target. Everybody's all over the map on what to expect.''

For FedEx, the average earnings estimate of 14 analysts surveyed by Bloomberg was for $1.71 a share.

FedEx dropped $2.96 to $87.41 at 5:52 p.m. after the close of regular New York trading. Earlier, the shares declined 3 percent to $90.37 in New York Stock Exchange composite trading.

Lag in Surcharges

FedEx and UPS typically have a two-month lag in recovering fuel expenses through surcharges. In early May, FedEx boosted its surcharge on express shipments to 25 percent, from 20 percent.

``While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices,'' Chief Financial Officer Alan Graf said in the statement.

The new outlook assumes no additional increases in fuel prices and no further weakening of the economy, FedEx said.

Economists anticipate the economy will grow at a 0.1 percent annual rate from April to June, the least since the 2001 recession, according to a monthly survey by Bloomberg News published today. Gross domestic product rose at a 0.6 percent pace in both the first quarter and 2007's final three months.

Record Prices

Jet fuel for immediate delivery in New York Harbor reached a record $3.83 a gallon today and has risen 35 percent this year. Diesel increased 25 percent this year to a record $4.27 as of yesterday, according to AAA.

Fuel is FedEx's second-largest cost, after labor. In the third quarter, the company's fuel expense rose 42 percent to $1.18 billion.

FedEx in November changed the earnings forecast for its fiscal second-quarter and full-year earnings, lowering both. The company declined to provide the number of times it has reduced its profit outlook in its history, spokesman Jess Bunn said.

The company was founded in 1971 by Chairman and Chief Executive Officer Fred Smith. FedEx controls about 30 percent of the U.S. package market, according to SJ Consulting Group Inc.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

Last Updated: May 9, 2008 18:00 EDT