CORRECTED-UPDATE 3-FedEx profit up, but cuts costs

* Q2 EPS of $1.58 meets expectations

* Company foresees further economic hardship ahead

* CEO takes pay cut, FedEx suspends 401(k) contributions

* Cost cutting measures to save $800 mln by end of FY2010

* Shares rise 1.5 pct

(Recasts first sentence, adds analyst comments, other background, updates stock action)

By Nick Carey

DETROIT (Reuters) - Package delivery giant FedEx Corp (FDX.N) reported a higher profit for its fiscal second quarter, meeting expectations, but announced a 20 percent pay cut for CEO Fred Smith and said it was suspending retirement plan contributions as the U.S. economy's outlook looks bleak.

FedEx said it has a hiring freeze in place and has cut staff levels at its FedEx Freight and FedEx Office units.