Sept. 18 (Bloomberg) -- FedEx Corp., the second-largest U.S. package-shipping company, said earnings fell 22 percent on waning demand for express deliveries while forecasting a profit for the current quarter that exceeds analysts' estimates.

First-quarter net income was $384 million, or $1.23 a share, the Memphis, Tennessee-based company said today in a statement. FedEx had announced the per-share profit on Sept. 9.

The results reflect a shift away from more-expensive overnight shipping as businesses and consumers pared spending. The drop in such deliveries at FedEx, considered a proxy for the economy, may be an ``ominous'' sign for U.S. growth prospects, said Dan Ortwerth, an Edward Jones & Co. analyst in St. Louis.

``It's quashed any hopes that people have that we're going to emerge from the current period of weakness sooner rather than later,'' Ortwerth said in an interview. He has a ``buy'' rating on FedEx shares.

Revenue for the three months ended Aug. 31 rose 8.4 percent to $9.97 billion, the company said in a statement.

Per-share profit matched the average estimate of 12 analysts in a Bloomberg survey. The net income figures compare with $494 million, or $1.58 a share, a year earlier.

FedEx rose $3.06, or 3.5 percent, to $91.13 at 4:15 p.m. in New York Stock Exchange stock exchange composite trading, after falling to $85.68 earlier. The shares declined 16 percent in the past year.

Second-Quarter Forecast

FedEx said fiscal second-quarter earnings would be $1.40 to $1.60 a share, higher than the $1.31 average estimate of analysts in a Bloomberg survey. FedEx also reiterated its full- year profit outlook of $4.75 to $5.25 a share.

``The company got hurt pretty bad on the way up, and it's getting paid back on the way down'' as fuel prices fall, Ortwerth said. ``The greater portion of their recent downward turn in fuel costs will be manifested in the second quarter.''

FedEx's fuel bill for the first fiscal quarter jumped 66 percent to $1.6 billion. FedEx's fuel surcharges for express packages rose to a record 34.5 percent in early August, more than double what they were a year ago.

``Global economic conditions are challenging, but FedEx is taking strong, proactive actions to manage through this difficult cycle,'' Chief Executive Officer Fred Smith said in the statement.

Earlier this month, FedEx cut its capital spending budget for the fiscal year by $400 million, to $2.6 billion.

U.S. express-package volume slid 5 percent for the first quarter, with a 10 percent decline in overnight envelope shipments, one of FedEx's most-profitable offerings. Ground volume rose 4 percent as customers switched to this less- expensive option.

Slowing Economy

FedEx expects U.S. gross domestic product to expand 1.9 percent for calendar year 2008, with ``similar economic conditions'' in 2009, Mike Glenn, executive vice president of market development, said on a conference call with investors and analysts.

That would trail the annual average of 3 percent the past 10 years. U.S. growth will be 1.8 percent in 2008 as job losses prompt consumers to reduce spending, according to the median estimate of economists surveyed by Bloomberg from Sept. 2 to Sept. 9.

Chief Financial Officer Alan Graf said on the call that he sees ``no improvement'' in the U.S. economy in the near term, and that there is ``weakness'' in the global economy as well.

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

Last Updated: September 18, 2008 16:28 EDT