Fedex (TG:FDX)
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FedEx Corp.'s (FDX) fiscal fourth-quarter loss widened, as a big impairment charge stemming largely from its Kinko's business took a chunk out of results and as the poor economy continued to sap shipping demand.

FedEx, considered an economic bellwether, also forecast results for its fiscal first quarter well below Wall Street expectations, even as Chief Executive Frederick W. Smith voiced some optimism that overall economic conditions are bottoming.

The stock slumped 2.6%, or $1.31, to $50.11 a share in recent trading.

"We believe the worst of the recession is likely behind us," Smith told analysts on a post-earnings conference call.

Still, Smith warned that the downturn continues to "throttle" FedEx's growth for the time being. The company also said it doesn't expect gross domestic product to turn positive until the first calendar quarter of 2010.

FedEx forecast earnings for its fiscal first quarter ending in August at 30 cents to 45 cents a share, compared with Wall Street's current consensus of 71 cents a share.

The company said the results likely will be hurt by depressed manufacturing activity, as well as a recent rise in fuel prices.

But Smith said a number of positive trends could start to help the company later this year, including "moderating" customer inventory-to-sales ratios that should fuel restocking and thus an uptick in shipments. He noted that conditions in the stock and credit markets have been improving as well, as have some indicators of the manufacturing and housing sectors and consumer confidence.

FedEx also said trends in its international shipments have been showing signs of stabilization, with improvements in Asia, Latin America and Europe, compared with the third quarter. "That's a very good sign for us," Chief Financial Officer Alan B. Graf Jr. said.

The international improvement was only slight, however. International shipping volumes at FedEx's Express unit fell 12% in the company's fiscal fourth quarter, compared with a 13% third-quarter decline.

Overall, FedEx posted a fiscal fourth-quarter loss of $876 million, or $2.82 a share, compared with a year-earlier loss of $241 million, or 78 cents a share.

The latest results included $1.2 billion in previously announced write-downs, most of which stemmed from FedEx's 2004 acquisition of Kinko's Inc.

Excluding items, earnings fell to 64 cents from $1.45, while revenue decreased 20% to $7.85 billion. Analysts surveyed by Thomson Reuters recently expected earnings of 51 cents and revenue of $8.32 billion.

FedEx's big Express unit saw average daily volume fall 3.4%, including a 2% drop in U.S. domestic package volume. Revenue per package fell 19% amid a competitive pricing environment, lower fuel surcharges and lower weight per package.

The company's Freight unit continued to reflect the impact of overcapacity and extremely competitive pricing in the less-than-truckload shipping market. The unit's volume slumped 17% in the fourth quarter while yield -- a broad barometer of pricing trends -- slumped 11%. Less-than-truckload shippers consolidate freight from multiple customers on single trucks.

Daily volume at FedEx's Ground segment was flat, helped partly by last year's exit of competitor Deutsche Post AG's (DPW.XE) DHL unit from the U.S. market.

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

(Kerry E. Grace contributed to this report)