FedEx profit more than doubles, tops expectations

NEW YORK (Reuters) - Package delivery giant FEDEX (FDX.NY)orp raised its outlook and posted sharply higher profit, but its shares fell as its domestic volume numbers disappointed investors' hopes for a U.S. economic recovery.

Profit for its fiscal third quarter ended Feb 28 was $239 million, or 76 cents per share, up from $97 million, or 31 cents per share, a year earlier.

Analysts on average had expected 72 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 7 percent to $8.7 billion.

Like its main rival, Atlanta-based United Parcel Service Inc , FedEx is considered a bellwether of U.S. economic activity. When the economy does well, companies and consumers ship more goods; in a recession, package volumes drop.

"FedEx' share price today is more a prism of people's attitude about the economy than it is about FedEx," said Edward Jones analyst Dan Ortwerth.

FedEx' International Priority average daily package volume increased 18 percent, led by exports from Asia. But its domestic average daily package volume grew only 1 percent.

Memphis-based FedEx raised its earnings forecast for the full year to a range of $3.60 to $3.80 a share, from a previous view of $3.45 to $3.75. Analysts on average expected $3.64.

FedEx forecast fourth-quarter earnings of $1.17 to $1.37 per share. Analysts expected $1.26.

The company said it was reinstating employee compensation programs it had cut in response to the recession. Ortwerth said this was a sign of confidence in the economy.

FedEx shares were down 0.3 percent to $89.50 in morning trading on the New York Stock Exchange.

(Reporting by Helen Chernikoff; editing by John Wallace)

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