MEMPHIS, Tennessee (AP) — FedEx Corp. gave a cloudy outlook for the third quarter yesterday that overshadowed the express package delivery company’s fiscal second-quarter profit increase of nine percent on a strong ground delivery business.FedEx also said it expected “steady performance” for the fiscal year, but its third-quarter forecast fell below analysts’ expectations and last year’s results. FedEx shares fell $2.54, or 2.2 percent, to $111.46 in afternoon trading on the New York Stock Exchange.

“We believe FedEx is beginning to see the impact of a slowing economy and as such, management is tempering expectations for the second half of the year,” analyst Art Hatfield said in a report for Morgan Keegan. Hatfield did not change his ratings or estimates, however.

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 US 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 November 30, increased to $511 million, or $1.64 per share. That is up from $471 million, or $1.53 per share, during the corresponding period last year.

The results included costs associated with a new labour contract for FedEx pilots which cut earnings by about 25 cents per 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 percent 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.