AFLAC Earned $1.73 per Share

AFLAC (AFL) just reported Q1 operating earnings of $1.73 per share which was 10 cents more than Wall Street had been expecting. For the first time in a long time, the yen/dollar exchange rate helped earnings. Forex added three cents per share.

The average yen/dollar exchange rate in the first quarter of 2016 was 115.35, or 3.3% stronger than the average rate of 119.16 in the first quarter of 2015. Operating earnings in the first quarter were $726 million, compared with $678 million in the first quarter of 2015. Operating earnings per diluted share in the quarter increased by 12.3% from a year ago to $1.73. Included in first quarter operating earnings is an adjustment of $8 million after-tax, or $.02 per diluted share, accelerating the recognition of stock compensation expense associated with retirement-eligible employees. The stronger yen/dollar exchange rate increased operating earnings per diluted share by $.03 for the first quarter. Excluding the impact from the stronger yen, operating earnings per diluted share increased 10.4%.

The company reiterated its full-year guidance of $6.17 to $6.41 per share. That’s based on the yen at 120.99 (and it’s not even close to that). For Q2, they see earnings ranging between $1.55 and $1.82 per share. That’s assuming the yen trades between 105 and 115. The Street consensus was for $1.64 per share.

Here’s CEO Dan Amos:

“I want to reiterate that our annual objective is to produce operating earnings per diluted share of $6.17 to $6.41, assuming the 2015 average exchange rate of 120.99 yen to the dollar. If the yen averages ¥105 to ¥115 to the dollar for the second quarter, we would expect earnings in the second quarter to be approximately $1.55 to $1.82 per diluted share. I would remind you that with interest rates at significantly depressed levels and a return to market volatility, it is difficult to invest cash flows at attractive yields while maintaining a prudent risk tolerance. Additionally, we expect 2016 benefit ratios will continue to be strong in both the U.S. and Japan, recognizing that the first quarter is typically more favorable than the rest of the year. We are well-positioned in the two best insurance markets in the world and are working very hard to achieve our earnings-per-share objective while also ensuring we deliver on our promise to policyholders.”

Posted by on April 26th, 2016 at 4:35 pm


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