Health insurance provider Aflac Inc. (AFL) on Tuesday reported a 9 percent decline in profit for the second quarter from last year, reflecting lower revenues due to a weaker yen, as well as fewer investment gains. However, both revenue and operating earnings for the quarter beat analysts' estimates.
Looking ahead, the company forecast earnings for the third quarter below Street expectations and tightened its earnings guidance for fiscal 2014.
Aflac's net income for the second quarter declined to $810 million or $1.78 per share from $889 million or $1.90 per share in the year-ago period.
The latest quarter's results include after-tax net realized investment gains of $60 million or $0.13 per share, compared with net after-tax gains of $130 million or $0.28 per share in the prior-year quarter.
Operating earnings, which exclude special items, were $757 million or $1.66 per share, compared to $759 million or $1.62 per share in the same period last year. On average, twenty-three analysts polled by Thomson Reuters expected the company to report earnings of $1.59 per share for the quarter. Analysts' estimates typically exclude special items.
Aflac's revenues for the quarter declined 3 percent to $5.84 billion from $6.04 billion in the year-ago period. Analysts had a consensus revenue estimate of $5.79 billion for the fourth quarter.
Aflac, which earns most of its revenue from Japan, was hurt largely by the impact of a weaker yen against the dollar. The average yen/dollar exchange rate in the quarter was 102.15, or 3.3 percent weaker than in the same period last year.
For the second quarter, Aflac Japan's total revenue declined 2.7 percent to $4.3 billion. In the U.S. segment, total revenues increased 1.3 percent to $1.5 billion.
Looking ahead to the third quarter, Aflac forecasts earnings in a range of about $1.38 to $1.47 per share, assuming the yen will average 100 to 105 to the dollar. Street expects the company to earn $1.52 per share for the quarter.
For fiscal 2014, Aflac now expects reported operating earnings in a range of $6.16 to $6.30 per share. Earlier, the company forecast earnings of $6.06 to $6.40 per share. Analysts expect the company to earn $6.26 per share for the year.
Aflac's board declared a third-quarter cash dividend of $0.37 per share, payable on September 3, 2014, to shareholders of record on August 20, 2014.
AFL closed Tuesday's trading at $63.14, down $0.51 or 0.80 percent on a volume of 2.31 million shares. In after-hours, the stock further declined $2.54 or 4.02 percent to $60.60.
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