American Express Co
The New York-based card payments company expects to record charges of $113 million, or $74 million after tax, reducing per-share earnings by 6 cents. That would reduce fourth-quarter net income to $1.1 billion, or 88 cents a share.
Excluding the charges, earnings would be 94 cents a share, compared with the consensus analyst estimate of 95 cents according to Thomson Reuters I/B/E/S estimates.
Shares of American Express were down 3.1 percent at $44.95 on Wednesday morning on the New York Stock Exchange.
Even with the charges, American Express profit will surge by nearly half from the $716 million, or 60 cents a share, reported a year ago. American Express said card holders' spending rose to record highs.
Despite an uneven economic environment, credit quality trends also continued to improve with key indicators for the quarter now back to -- or better than -- historical levels, Chief Executive Kenneth Chenault said in a statement.
Declining loan losses allowed the company to reduce the money it sets aside as provisions, boosting profit.
American Express said a servicing facility in Greensboro, North Carolina, will be closed, and its work load will be distributed to other U.S. locations. The company also intends to transfer work handled in Madrid to facilities in Britain and Argentina.
Additionally, service support for its Japanese card business will move to Japan from Sydney, Australia. In all, staffing levels would be reduced by a net 550 jobs, while some 3,500 positions would be moved to new locations.
American Express said more customers are reaching out to the company on routine matters through the Internet and with mobile devices, reducing the number of telephone calls to its service centers.
Staffing levels have declined to reflect those lower volumes, largely by not filling positions that opened up when employees leave, American Express said. The reduced staffing levels have created significant vacancy levels in some facilities.
The moves are expected to generate additional charges of $60 million to $80 million this year, related to future real estate closings and employee compensation. The entire process is not expected to be completed until the end of this year.
Starting next year, though, these moves are expected to reduce expenses by $70 million a year.
(Reporting by Joseph A. Giannone, editing by Gerald E. McCormick and Matthew Lewis)