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FedEx Corp. said Thursday its fiscal first-quarter earnings fell 22%, but still met Wall Street’s expectations, as cost cuts partially offset the impact of slowing global growth.

The package delivery company also predicted it will beat analysts’ current expectations for its fiscal second quarter, and said it will hike shipping rates at its Express unit starting early next year.

Memphis, Tenn.-based FedEx (FDX, Fortune 500) earned $384 million, or $1.23 per share, in the three months ended Aug. 31, compared with $494 million, or $1.58 per share, a year earlier.

Revenue rose 8% to $9.97 billion from $9.20 billion a year ago.

A Thomson Reuters poll showed analysts, on average, were expecting profit of $1.23 per share on revenue of $9.92 billion.

"As FedEx faces today’s especially tough economic challenges, we’ll continue to hold the line on costs across all segments," Chairman and Chief Executive Fred Smith said in a conference call. "This includes lowering variable incentive compensation, controlling discretionary spending and limiting staff."

Among the cutbacks, FedEx said it managed flight hours and reduced fuel consumption by about 5% in its Express unit during the quarter. Also, the company has "significantly curtailed" its bonus programs and is not adding staff "unless it’s an operational or sales necessity," added Chief Financial Officer Alan Graf.

But overall, Stifel Nicolas analyst David Ross said in a telephone interview that the company is mitigating the weak U.S. economy and slowing international growth "pretty well" while maintaining strong customer service. This includes a planned update of its Boeing fleet to further cut fuel consumption.

"The company is spending where it needs to spend - they don’t want to dilute their service environment," Ross said.

However, FedEx said cost-cutting efforts in the quarter were outweighed by global economic weakness and fuel prices that remain high. The company also said its higher fuel surcharges are dampening demand. Although the price of jet fuel slipped toward the end of the quarter, FedEx still paid an average of 77% more year-over-year.

Growth in its ground and international-domestic express units and from a postal service deal was "substantially offset by a continued decline in U.S us fast cash. domestic express shipments," FedEx said. The company added that its documents unit was hurt by the downturn in the financial and housing markets.

Ross said he expects the company to post lower yields in its documents unit over the next several quarters, as businesses look to save money by sending documents via second-day or ground service instead of priority overnight.

For the second quarter, FedEx expects to earn $1.40 to $1.60 per share, well above Wall Street’s average forecast of $1.35 per share for the period. The company earned $1.54 in the year-ago second quarter.

For the full year, the company maintained its profit forecast of $4.75 to $5.25 per share, citing slowing global growth. Analysts, on average, currently expect $5.18 per share. FedEx said the predictions incorporate current fuel prices.

FedEx’s Express unit will raise rates by an average of 6.9% for U.S. and U.S. export services, beginning on Jan. 5. The company said the rate hike will be partially offset by a 2% reduction in the fuel surcharge.

Analyst Edward Wolfe of Wolfe Research called the rate increase "surprising" considering current weak volumes and pricing.

Wolfe also noted that last year’s increase was not very effective because it made it difficult for the company to buoy already-weak demand.

"While this could be viewed positively as a sign of FedEx’s confidence in pricing, given last year’s experience in realizing announced list increases, FedEx and UPS don’t have great credibility with customers or investors in this realm," he said.

FedEx shares fell $1.62 to $86.45 in morning trading. UPS shares lost 5 cents at $65.51. 

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