Visa to Cut Costs as Virus Trims Revenue; AmEx Sees Asia Hit

(Bloomberg) -- Visa Inc. said it's cutting costs and American Express Co. reported a material slowdown in Asia travel spending as the coronavirus starts taking a bite out of revenue at the two companies.

Travel spending by AmEx customers in mainland China, Hong Kong, Taiwan, Singapore and Japan has dropped, though the broader Asia-Pacific region -- which also includes Australia -- represents just 9% of overall revenue, Chief Financial Officer Jeff Campbell told investors at a conference Wednesday.

Visa had previously warned that the slowdown in cardholders' overseas spending would likely crimp its outlook for revenue growth by 2.5 to 3.5 percentage points. The company said Wednesday that cost cuts could help counter the impact.

“Whether we like it or not, various things are just getting canceled so, to some degree, that's curtailing people moving around the world,” Visa Chief Executive Officer Al Kelly said. “I think we're trying to not only watch it, but be proactive trying to manage our expense base a bit.”

Corporations around the world are restricting or banning non-essential travel, especially to countries hardest hit by the outbreak. Prospects for the global economy are becoming “more dire,” an official at the International Monetary Fund said Wednesday, as governments and central banks step up emergency responses to limit the economic damage.

Mastercard Expenses

Mastercard Inc. said it's deciding whether to implement expense cuts, but doesn't have enough clarity yet on the severity and duration of the problem.

“Erratic expense management is not what we do,” Mastercard Chief Product Officer Michael Miebach, who will become CEO on Jan. 1, said at the investor conference. “We will try to stay true to the strategic direction, but there is a plan where we can say, ‘OK, if we have to, here's a couple things that we can do.'”

At AmEx, roughly 8% of spending on cards comes from airlines, and the firm expects some cardholders who forgo travel to Asia to book trips to other parts of the U.S., Campbell said.

“The kinds of impacts we have seen in those five Asian countries, are you going to see that impact spread into Europe and into the U.S.?” he said. “As we sit here today, we don't have material evidence of that spread.”

Still, “I'm glad I'm not an airline CFO right now,” joked Campbell, who was previously the chief financial officer of American Airlines Group Inc.

Wex Inc., one of the largest providers of fuel cards for corporate fleets, warned investors in a filing Wednesday that its first-quarter revenue will probably be 2% to 3% lower than the guidance it gave three weeks ago.

To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson, Daniel Taub

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