(By Balaseshan) American Express Co. (NYSE: AXP) reported better than expected quarterly earnings on revenue growth and higher cardmember spending. The company expects to eliminate about 5,400 jobs to lower operating expenses.
Adjusted earnings for the fourth quarter were $1.2 billion or $1.09 per share, compared to $1.2 billion or $1.01 per share last year.
Total revenue increased 5% to $8.1 billion, on a rise in cardmember spending and credit quality that remained strong during the fourth quarter despite an uneven economy.
Analysts, on average, polled by Thomson Reuters had expected a profit of $1.06 per share on revenue of $8.12 billion for the fourth quarter.
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Cardmember spending rose 8%, despite a brief dip in late October/early November reflecting the impact of Hurricane Sandy on consumers and businesses in the northeastern United States. Fourth quarter and full year 2012 results will be released as scheduled on January 17.
The restructuring charge of $400 million, which was included in the fourth quarter results, will consist largely of severance payments related to the elimination of an estimated 5,400 jobs.
The job reductions will take place across seniority levels, businesses and staff groups. The largest reductions will come in the travel businesses, the company 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% less than the current total of 63,500.
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The restructuring plan is expected to be substantially completed by the end of 2013.
"For the next two years, our aim is to hold annual operating expense increases to less than 3%. The overall restructuring program will put us in a better position as we seek to deliver strong results for shareholders and to maintain marketing and promotion investments at about 9% of revenues," said Kenneth Chenault, chief executive of American Express.
Fourth quarter and full year 2012 results will be released as scheduled on January 17.
AXP closed Thursday's regular session up 0.88% at $60.79. The stock has been trading between $48.20 and $61.42 for the past 52 weeks.