American Express Company (NYSE:AXP) first quarter earnings hiked 6.5%, due to augmented spending and borrowing by cardholders. The company released the earnings report on Thursday after the closing of stock market, which topped analysts’ forecasts. But the shares came in under pressure following company’s statement that strong U.S dollar value hurt the earnings which also reduced turnover collected from other countries.
The global service giant led by Chairman and Chief Executive Kenneth Chenault, faced several hindrances in the first quarter of 2015, including the loss of a court case and a profitable 16-year partnership with Costco Wholesale Corp.
American Express gained a profit of $1.53 billion, or $1.48 a share, up from $1.43 billion, or $1.33 a share a year earlier.
On the other hand Revenue of the company fell 2.7%, to $7.95 billion. Excluding the influence of alterations in currency values, revenue rose 1 percent and hiked 5% excluding business-travel operations that were carried out by the company a year earlier.
Card member loans spiked to $66.8 billion in the Q1 of 2015, climbed 4 percent compared to a year ago. According to American Express, credit indicators continued to remain at historically strong levels.
In a statement, Mr. Chenault reiterated the company’s forecast that 2015 earnings will be “flat to modestly down year over year.” AmEx is also feeling the impact from ending its relationship with Costco Canada at the end of last year, he said.
In U.S American Express card-service business blossomed as is evident in its earnings reports, its earnings advanced 7%, to $934 million while revenue grew 6%, to $4.5 billion.
In the last couple of months, the company is struggling to sustain the longtime revenue-growth mark of 8%, and for that purpose the firm has taken several bold steps including the removal of 4,000 jobs throughout the year. The company also limits its expenses as is shown in first quarter results, falling 4.9%, to $5.21 billion.
Chief Financial Officer Jeffrey Campbell during conference with analysts said the company will continue to limit expenses as its association with Costco in the U.S wasn’t good this year. Mr. Campbell said growth opportunities will include servicing more small businesses and continuing to invest in international markets.
