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Amex profit tumbles
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January 28, 2002: 3:11 p.m. ET
Financial firm's profits fall sharply from a year ago amid economic recession.
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NEW YORK (CNN/Money) - American Express Corp. said Monday its fourth-quarter profit tumbled, falling just shy of Wall Street expectations, as it struggled with recession-induced declines in its travel business.
For the quarter ended Dec. 31, Dow component American Express (AXP: down $0.82 to $36.17, Research, Estimates) reported earnings of $297 million, or 22 cents a share, down sharply from earnings of $677 million, or 50 cents a share, a year earlier. Analysts on average anticipated a profit of 23 cents a share, according to earnings tracker First Call.
The results include a $279 million restructuring charge in the quarter related to 6,800 jobs the company cut in the period along with the consolidation of some facilities.
Excluding the restructuring charge, American Express posted earnings of $476 million, or 36 cents a share.
American Express shares slipped 79 cents in Monday afternoon trading following the announcement.
The bulk of the job cuts are coming in the travel business, which suffered a sharp slowdown after the Sept. 11 attacks. American Express anticipates the changes will save about $280 million in 2002.
Fourth-quarter revenue declined 2 percent to $5.6 billion from $5.7 billion.
"While we are seeing signs of improvement in volumes, we are continuing to take a cautious view and expect the economy to remain weak throughout 2002," CEO Kenneth Chenault said in a statement.
For the full year, Amex posted earnings of $1.31 billion, or 98 cents a share, down from $2.81 billion, or $2.07 a share, a year earlier.
Revenue for the year fell 3 percent to $21.4 billion from $22.1 billion.
The company said 2001 results were hurt by a $1.01 billion pre-tax charge in the first half of the year related to write-downs in the investment portfolio at American Express Financial Advisors and losses associated with rebalancing the portfolio toward lower-risk securities.
Amex also took a $631 million pre-tax restructuring charge in the third and fourth quarters in addition to a $98 million Sept. 11-related pretax charge.
Travel-related services posted a 24 percent drop in earnings for the year, with a net revenue increase of 4 percent in the unit.
American Express Financial Advisors (AEFA) reported net income for 2001 of $52 million, down from $1.03 billion a year earlier. Net revenues decreased 33 percent. 
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