American Express Earnings Slip, Hurt By Strong U.S. Dollar

Industries Dow Jones Newswires

American Express Co. said its second-quarter earnings fell 3.7%, as results in its international operations were hit by the strong U.S. dollar.

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Shares fell 1.4% to $77.90 in recent after-hours trading as the company's revenue missed expectations.

In addition to stepped up competition from its rivals, the New York-based company must contend with the loss of its lucrative 16-year partnership with Costco Wholesale Corp. and a U.S. legal ruling that upends AmEx's long-standing rules that don't permit merchants to steer customers to other forms of payment--a decision American Express has said it plans to appeal.

Chairman and Chief Executive Kenneth I. Chenault said Wednesday that expense controls and higher card-member spending and loan volume helped mitigate the impact of a strong U.S. dollar and the year-ago contribution from the global business travel operation, which currently operates as a joint venture.

American Express Company - Earnings Surprise | FindTheCompany

Overall, American Express reported a profit of $1.47 billion, or $1.42 a share, down from $1.53 billion, or $1.43 a share, a year earlier. The year-earlier period included a gain related to the business-travel operations that previously were part of the company.

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Revenue, net of interest expense, decreased 4% to $8.28 billion. However, revenue rose 5% excluding the impact of currency conversions and the business-travel operations.

Analysts polled by Thomson Reuters expected per-share profit of $1.32 and revenue of $8.46 billion.

The company's U.S. card-service business reported that its earnings grew 15% to $886 million. Revenue increased 6% to $4.7 billion, reflecting an increase in card-member spending and higher net interest income from growth in the company's loan portfolio. Provisions for loan losses decreased to $327 million from $339 million.

(By Tess Stynes)

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