The Western Union Co. (NYSE: WU) reported on Tuesday that it net income fell 14% in the fiscal first quarter as revenue declined due to lower transaction fees. However, the financial services company said that it was optimistic about better revenue and profit growth in fiscal 2014 and maintained its outlook on the current year, citing ongoing improvement in its money transfer business.
Shares gained about 1.15% in regular trading hours and remained largely unchanged in extended hours.
“As we stated in February, we expect 2013 to be a transitional year as we implement key strategic actions, but we remain confident these actions will drive revenue and profit growth in 2014 and beyond,”said President and CEO Hikmet Ersek said in a statement during earnings call.
Western Union, which is the world’s leading money transfer company, is slashing prices and spending more money on technology in order to counter growing competition and regain traction in international remittance market. According to Reuters, the World Bank estimates international remittances were at $529 billion, last year.
The Company received a big blow last year when it lost an exclusive partnership with a leading Mexican financial services group which also entered in deal with smaller player MoneyGram International Inc.
Western Union’s exclusive agency contracts in some other countries are also under threat. In its earlier regulatory filing, the Company revealed that proposed laws in some countries spread across Africa, south Asia and eastern Europe could disallow agreements with agencies.
For the quarter ended March 31, Western Union reported net income of $212 million or 37 cents a share compared to a profit of $247.3 million or 40 cents a share, in the same quarter of last year.
Revenue for the period fell 5% to $1.33 billion.
Analysts polled by Thomson Reuters were expecting earnings of 32 cents a share on revenue of $1.34 billion.
Revenue from its consumer division, which accounts for about 80% of the entire top line, declined 7% in the fiscal first quarter.
The Company maintained its earnings guidance on the current fiscal, which is between $1.33 a share and $1.43 a share while analysts’ estimate was of $1.42 a share.
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