In a conference call with analysts, FedEx founder and chief executive Frederick W. Smith said FedEx expects "steady performance" for the fiscal year ending May 31 largely because of a "healthy global economy led by continued strong growth in Asia."
But Smith also acknowledged he expects a "somewhat slower growth in the U.S. economy related to adjustments in housing and manufacturing sectors."
During the same call, chief financial officer Allen B. Graf reacted to an Internet headline saying the earnings report "disappoints."
"I want to remind everybody on this call that we have the same outlook for the year that we had last quarter, so be careful about the talking heads," Graf said. "We have the same outlook. We're going to have a strong year."
FedEx said earnings for the second quarter, which ended Nov. 30, increased to $511 million, or $1.64 a share. That is up from $471 million, or $1.53 a share, during the corresponding period last year.
The results included costs associated with a new labor contract for FedEx pilots which cut earnings by about 25 cents a share. Excluding those costs, the company said it earned $1.89 a share for the second quarter.
Analysts polled by Thomson Financial predicted a profit for the quarter of $1.76 a share. That estimate excludes 20 cents a share in costs for one-time bonuses and other compensation included in the pilots' contract.
FedEx revenue was up 10% to $8.93 billion from $8.09 billion. Analysts expected revenue of $8.91 billion.
Graf said second-quarter earnings were helped by lower-than-expected fuel costs.
Looking ahead, the company said it now expects adjusted full-year profit to range between $6.60 to $6.90 a share. The company said in September that it expected adjusted earnings of $6.50 to $6.85 per share.
FedEx forecast profit of $1.20 to $1.35 a share for the third quarter, down from $1.38 a share in last year's third quarter, and between $1.98 and $2.13 a share in the fourth quarter.
Analysts now expect a profit in the fiscal year of $6.82 a share, third-quarter earnings of $1.55 a share and fourth-quarter earnings of $1.98 a share.
Graf said the company's third-quarter guidance is suffering a tough comparison to last year's results because FedEx's December 2005 fuel surcharges were set after prices had spiked following Hurricane Katrina.
"Last year's third quarter benefited from the timing lag in setting the surcharge and this year the opposite is going to occur," Graf said.