Though American
Express on Wednesday reported improved second-quarter performance for many of
its key financial and operational metrics, global corporate travel sales
dropped 2 percent year over year, the sixth consecutive quarter of such
decline. That decrease compared to increases in the company's U.S. and
international consumer travel sales, up 3 percent and 5 percent respectively.
Comprised of global
corporate payments and global business travel, Amex's Global Commercial Services
division generated second-quarter net income of $226 million, up 3 percent year
over year. Adjusted for foreign currency exchanges, GCS billed business grew by
5 percent, the smallest rate of growth among the company's four main divisions.
GCS total
revenues net of interest expense rose 1 percent to $1.2 billion, primarily due
to higher cardholder spending that was "partially offset by lower business
travel commissions and fees," according to Amex. Total expenses decreased
4 percent to $853 million, which "reflected lower salaries and employee
benefits and other operating expenses."
Overall, Amex
companywide billed business during the second quarter grew 7 percent to $237.7
billion, while cards in force and average basic cardholder spending each
increased 4 percent. The company's quarterly net income improved by 5 percent
to $1.4 billion.
"Employee
count is 1,300 lower than in the second quarter of 2012," said CFO Dan
Henry during a conference call with analysts. "We estimate employee count to year-end 2013 will be 4 to 6
percent lower than the year-end 2012." [See correction below.] The company in January announced
5,400 layoffs, including many within global business travel operations, as
part of a restructuring.
During the conference call, Henry also addressed the
European Commission's draft proposals to cap certain fees on debit and credit
cards. “Our
proprietary consumer and corporate card businesses are not covered by the
pricing caps,” Henry said. “Third-party systems such as American Express would
only be covered when they license other institutions to issue cards as in our Global
Network Services business. GNS represents a relatively small percentage of our
European business.”
Henry will
retire from the company in early August, to be replaced by Jeff Campbell,
previously CFO at McKesson Corp.
New European Leaders
In other
news, American Express Global Business Travel on Thursday named two new leaders
in Europe. The company appointed Tommy Bonner, a 20-year Amex veteran, to serve
as vice president and head of European sales. Bonner most recently was general
manager of Global Merchant Services Nordics and head of acquisition for Global
Merchant Services UK.
Amex also
named Champa Magesh vice president and general manager for the United Kingdom.
Magesh during the past seven years held roles within the Global Corporate
Payments division.
"We
are part of one of the world's largest travel agency networks which means we
need a regional structure that is able to meet our clients' business travel
needs globally, regionally and on a local market level," according to a
statement attributed to Katrina Cliffe, Amex vice president and general manager
for Europe, the Middle East and Africa.
An Amex
spokesperson added that the company "recently reviewed the way in which
our European leadership team is structured and these two new roles were created
as a result."
— David Jonas contributed to
this report.
CORRECTION, July 29: A previous version of this report incorrectly quoted American Express CFO Dan Henry's estimate of Amex's employee count. Amex estimates its employee count at the end of 2013 will be 4 percent to 6 percent lower than year-end 2012, not 46 percent as indicated in the previous version.