American Express Co.’s second-quarter profits fell 5 percent from a year ago, but the results still solidly beat analysts’ estimates. Once again, a strong U.S. dollar weighed on the company’s international operations.
The New York-based company said it earned $1.44 billion after payments to preferred shareholders, down from $1.52 billion in the same period a year ago. On a per-share basis, AmEx had net income of $1.42.
The per-share results beat Wall Street expectations, with analysts surveyed by Zacks Investment Research expecting earnings of $1.33 per share, but the company’s second-quarter revenue of $8.28 billion missed forecasts.
American Express’s card business in the U.S., its largest business by revenue and profits, had net revenues of $4.4 billion in the quarter, up from $4.1 billion a year ago.
The amount of money spent on American Express’s namesake cards, which is a closely watched metric for the company, rose in the U.S. but fell internationally, reflecting the stronger dollar. U.S. cardmember spending rose 5 percent to $181.6 billion, while international spending fell 5 percent to $80.4 billion.
A stronger dollar makes goods purchased internationally worth less when their local-currency price is converted to dollars. AmEx is particularly exposed to currency fluctuations when U.S. customers buy products internationally when they travel, but their accounts are denominated in dollars.
The company’s results in the first quarter were dampened by a stronger dollar, and CEO Kenneth Chenault, along with other AmEx executives, has said previously that a strong dollar would hurt profits all year.
American Express shares have fallen 15 percent since the beginning of the year, while the Standard & Poor’s 500 index has climbed almost 3 percent. Along with the strong dollar, the company has had to contend with a series of bad news earlier this year. AmEx lost an exclusive deal with Costco, losing the credit-card business to Citigroup and the payment network to Visa, and it lost an antitrust suit.