American Express Co. (NYSE: AXP) is not usually the first of the financial DJIA stocks to report its earnings in the quarter. The credit card issuer just announced its earnings along with restructuring charges. The card issuer said that card member volumes were strong despite an uneven economy.
The company is planning 5,400 layoffs. It said, “Those reductions will be partly offset by jobs the company expects to add during the year. Overall staffing levels by year end 2013 are expected to be 4 to 6 percent less than the current total of 63,500.”
Excluding certain items, fourth quarter adjusted net income was $1.2 billion in the quarter. This came to $1.09 per share. For the year ago period, net income was $1.2 billion, or $1.01 per share. Its consolidated quarterly revenues (net of interest expense) were up 5% from a year ago to $8.1 billion.
Thomson Reuters had a consensus of $1.06 EPS and its consensus in sales was $8.12 billion. We would note that earnings came to $637 million or $0.56 EPS if you back out the charges against the earnings.
Cardmember spending was up 8% from a year ago. Credit indicators remained at historically low levels. The write-off rate for the U.S. lending portfolio (principal only) was 2.0 percent for the quarter. These are the charges:
- $400 million restructuring charge ($287 million after-tax) designed to contain future operating expenses, adapt parts of the business as more customers transact online or through mobile channels, and provide the resources for additional growth initiatives in the U.S. and internationally.
- $342 million expense ($212 million after-tax) reflecting enhancements to the process that estimates future redemptions of Membership Rewards points by U.S. cardmembers.
- Approximately $153 million ($95 million after-tax) of cardmember reimbursements for various types of transactions dating back several years. This amount deals with fees, interest and bonus rewards as well as an incremental expense related to the consent orders entered into with regulators last October.
This is not the official earnings report for the quarter but it might as well be. It is very unusual for a DJIA component to do this but perhaps the credit card issuer discovered that the issues around this were leaking out.
Shares of AmEx are up 1.6% at $61.75 in the after-hours session. We would note that this would be a 52-week high as the 52-week trading range is $48.82 to $61.42.
AmEx is now in striking distance of its all-time high! It must feel great to get a pink slip from your employer and to hear the shareholders cheering in the background and bonusing management.
JON C. OGG