By Bob Sechler
FedEx Corp. (FDX) heralded growing momentum in the global economy Thursday and said the U.S. has “turned a corner,” even as the package-delivery giant posted a 30% decline in fiscal second-quarter profit and issued a lukewarm near-term earnings forecast.

Chief Executive Frederick W. Smith said volume trends are on the upswing, buoyed by modest economic improvement and an end to recession-induced efforts by shipping customers to reduce inventories.

“We expect stronger demand for our services” in the second half of the fiscal year, Smith said.

He noted that FedEx is having a particularly strong December, a trend that bodes well for the critical holiday shopping season. FedEx and rival United Parcel Service Inc. (UPS) are viewed as bellwethers for the broad economy because of the volume and breadth of goods they ship.

FedEx announced Thursday that it shipped 14.1 million packages on Monday, its busiest day of the year. The figure is well above its forecast of about 13 million, and up more than 17% from 12 million packages on its busiest day last year.

Still, FedEx also issued a tepid earnings forecast for its fiscal third quarter, saying it expects a profit of 50 cents to 70 cents a share. Wall Street is projecting earnings of 84 cents a share for the quarter, according to Thomson Reuters.

The forecast disappointed investors and helped send the shares down $4.64, or 5.2%, to $85.31 in recent trading.

But FedEx was quick to point to its full-year forecast, in which it pegged earnings at $3.45 to $3.75 a share, compared with Wall Street’s average view of $3.46 a share. FedEx executives said the fiscal third quarter is their slowest seasonally, and they also said the company may face some higher costs as it aims to keep service levels strong amid the improving volume.

“We should have a lot of momentum” going into the fiscal fourth quarter, Chief Financial Officer Alan B. Graf Jr. said.

The optimism is among the factors that caused FedEx to announce Thursday that is joining a growing roster of companies restoring portions of benefit and pension cuts enacted during the downturn.

FedEx said that because of its “outlook for modestly improving economic conditions and business performance,” it will resume salary increases in 2010 as well as resume 50% of its 401(k) match for most U.S. employees. Both programs had been suspended a year ago.

For the fiscal second quarter ended Nov. 30, FedEx posted a profit of $345 million, or $1.10 a share, down from $493 million, or $1.58 a share, a year earlier. Revenue dropped 9.9% to $8.6 billion.

The company earlier this month raised its earnings forecast for the quarter to $1.10 a share.

The company’s express-shipping business saw weaker results, but its ground segment saw higher revenue and profit. Total average daily package volume increased 4%.

-By Bob Sechler, Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com

(Nathan Becker contributed to this report/)

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