American Express’ Profit Up 11%, Beating Estimates
American Express Co. said on Monday that double-digit gains in its travel-related services and financial advisor units pushed second-quarter profit up 11%, topping Wall Street estimates.
The company said net income rose to $578 million, or $1.24 a diluted share, from $520 million, or $1.08 a year ago, beating consensus analysts’ estimates by 2 cents. Revenue advanced 7.7% to $4.76 billion.
The results boosted American Express shares, which closed up $5.75 at $112.81, sparking a rally in the Dow Jones industrial average.
Net income at American Express’ charge card and travel unit rose 18%, driven by increases in the number of cards outstanding overseas and spending per cardholder.
Lending margins widened to 9.5% from 8.7% as new cardholders continued using their American Express cards after low introductory rates expired.
Earnings at the American Express Financial Advisors unit rose 16% on higher fee revenue tied to an increase in managed assets and a 34% jump in mutual fund sales. Annuity sales declined 26%.
But net income at American Express Bank/Travelers Cheque dropped 33% to $47 million as the economic downturn in Asia hurt income, commissions and fees. American Express said higher foreign exchange revenue, mostly in Asia, partly offset the decline.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
TELECOMUNICATIONS:
* Qwest Communications International Inc.’s losses widened, but less than expected, to $15.6 million, or 5 cents a share, in the second quarter, from $5.6 million, or 6 cents, a year ago. Analysts forecast a loss of 10 cents. Increased spending for expansion and marketing offset cost savings related to its recent acquisition of LCI International Inc. Pro forma revenue rose 4.9% to $694.3 million.
* US West Inc. said its pro forma profit rose 7.8% in the second quarter to $385 million, or 76 cents a diluted share, a penny higher than the average forecast. The regional Bell company’s revenue rose 7.9% to $3.05 billion, as local service revenue increased 15%.
INSURANCE:
* Chubb Corp. said its second-quarter operating profit fell 12% to $154.4 million, or 90 cents a share, missing estimates by 4 cents, as catastrophe losses climbed to $62.3 million from $18.1 million a year ago. Net property and casualty premiums written rose 5.2%. Chubb also said it plans to buy back up to 7.5% of its outstanding shares.
* Hartford Financial Services Group Inc. said earnings inched up 2% to $186 million, or 78 cents a diluted share, in the second quarter, beating forecasts by a penny, as revenue rose 10% to $3.49 billion. Catastrophe losses soared to $87 million from $5 million, after storms raged across the U.S.
* Liberty Financial Cos. said its second-quarter earnings edged down 1% to $29.7 million, or 63 cents a diluted share, hurt by capital losses at its Keyport Life Insurance Co. unit. The results matched expectations. Liberty, which is owned by Liberty Mutual Life Insurance Co., said total assets under management were about $54.1 billion at the end of the quarter, up from $50 billion.
* Safeco Corp.’s earnings dropped 44% to $58.2 million, or 41 cents a share, beating estimates of 37 cents, as a spate of storms boosted claims on insurance. Safeco had $80 million in claims as a result of storms in the U.S., causing it an underwriting loss of $64.4 million, contrasted with an underwriting profit of $23.6 million a year ago.
RESTAURANTS:
* CEC Entertainment Inc., operator of the Chuck E. Cheese pizza chain, said its earnings rose 24% to $7.3 million, or 39 cents a diluted share, as revenue gained 5.8% to $88.9 million. Analyst forecasts ranged from 39 cents to 43 cents for CEC, formerly known as ShowBiz Pizza Time Inc.
* Tricon Global Restaurants Inc. said its second-quarter earnings fell 12% to $69 million, or 45 cents a diluted share, as revenue dropped 15% to $2 billion. Sales at its Pizza Hut outlets open at least a year grew 9% and were up 3% at Taco Bell but fell 1% at KFC.
OTHER INDUSTRIES:
* Cardinal Health Inc.’s fiscal fourth-quarter profit advanced 26% to $79.4 million, or 71 cents a diluted share, 2 cents higher than estimates, as the drug wholesaler’s revenue jumped 27% to $4.38 billion.
* Louisiana-Pacific Corp. reported a second-quarter operating profit of $9 million, or 8 cents a share, well above the 3 cents forecast, contrasted with a loss of $10 million, or 10 cents, a year ago. Revenue fell 1.6% to $623.2 million. The lumber and building products company also said it plans to buy back about 18% of its shares.
* Royal Caribbean Cruises Ltd. said profit soared 93% to $88.8 million, or 97 cents a share, in the second quarter, beating forecasts of 90 cents, on higher ticket prices, new ships and cost savings from an acquisition. Revenue climbed 63% to $656.5 million.
* Tyson Foods Inc. said its third-quarter earnings rose 3.1% to $46.6 million, or 20 cents a diluted share, a penny higher than estimates, on a 23% jump in revenue to $1.95 billion. The world’s largest poultry company also said it will take a fiscal fourth-quarter pretax charge of about $200 million related to cutting costs, including possibly closing plants, firing workers or selling its unprofitable commercial fishing business.
* Union Carbide Corp. said its second-quarter profit tumbled 37% to $118 million, or 85 cents a diluted share, hit by Asia’s economic crisis, a strong dollar and lower prices. The results beat forecasts by a penny. Sales fell 12.6% to $1.46 billion.
* Wm. Wrigley Jr. Co. said second-quarter earnings increased 10% to $84.5 million, or 73 cents a diluted share, beating estimates of 72 cents. The chewing gum maker said revenue grew 3.9% to $545.7 million.
