American Express warns on COVID-19 pandemic impact
The coronavirus pandemic will hit revenues as business travel and cross-border transactions plummet.
Payments and travel services giant American Express has warned that the coronavirus pandemic will hit its revenues as business travel and cross-border transactions plummet amid the global lockdown. The company hosted an investor update call on 17th March 2020 where the senior board members gave an update about the effect of coronavirus on their financial performance.
The company in its investor call expressed that they are closely monitoring the situation and accessing the impact of this pandemic on their results. The company said the first two months of the year were on expected lines in terms of revenue and growth but the last week of February and March could spoil the Q1 results. The company expects its Q1 revenue growth to be between 2-4% and EPS between $1.9 to $2.1.
“American Express has a long runway to deliver strong, long-term performance, driven by our differentiated business model and our focus on our strategic imperatives,” said Chairman and Chief Executive Officer at American Express Stephen J. Squeri.
On the growing coronavirus crisis globally, the company said it is unable to forecast its future financial results beyond the first quarter. The company will provide its next update in its Q1 earnings call in April.
The company in its call said that the cross-border transactions have taken a big hit and this may continue until the time when the pandemic settles down.
“Cross border traffic has declined significantly”, Squeri said. “It’s also fair to say you haven’t yet seen the impact of the changes that have gone on in Europe and in the US just in the most recent days”.
He added, “We have some interesting data points because we can look at our Asia Pacific businesses. And certainly, if you look at Hong Kong, or a Taiwan, you saw cross border travel, cross border spending go down to extremely low levels. And I’d expect that you’ll see things trending in that direction, certainly in Europe, and potentially in the US in the coming days.”
However, there were some bright spots for American Express amid the gloom. “What you’re seeing is a lot of the non-T&E is pretty strong and it’s both e-commerce and particularly e-commerce and obviously, look at the grocery industry,” Squeri said. The company says the coronavirus has hit predominantly its Travel and Expense (T&E) segment while Non-T&E segment remains strong.