Western Union Expects Constant Currency Revenue Growth, Solid Earnings In 2016

(RTTNews) - The Western Union Company (WU) announced, for 2016, the company expects revenue to grow in low to mid-single digit constant currency. The company expects EPS in a range of $1.58 to $1.70, which includes an approximately $0.15 negative impact from changes in foreign exchange rates and reduced hedge benefits. Cash flow from operating activities are expected to be approximately $1 billion.

The company noted that its reported results are expected to be negatively impacted by the stronger U.S. dollar relative to 2015 rates, and the outlook also includes incremental investment in technology and tight management of other expenses. Foreign currency translation and reduced hedge benefits are anticipated to negatively impact 2016 revenues by approximately $250 million and operating profit by approximately $100 million, compared to the prior year.

Western Union expects operating margins to decline from 20.9% in 2015 (excluding the impact of the Paymap charge) to approximately 20% in 2016 due to the impact of foreign exchange, including reduced hedge benefits. Excluding all currency impacts, the outlook for operating margins in 2016 would be similar to 2015.

In the fourth quarter, revenues increased 3% on a constant currency basis compared to the prior year period, while reported revenues declined 2% due to the impact of the stronger U.S. dollar. Operating margin was 20.4% in the quarter, compared to 19.6% in the fourth quarter of 2014. The company said the operating margin improvement primarily resulted from lower expenses related to cost savings initiatives and benefits from foreign exchange hedges, partially offset by increased technology spending. Earnings per share of $0.42 was flat with the prior year period, as increased operating profit and fewer diluted shares outstanding were offset by a higher effective tax rate, the company said.

The company also announced that its Board declared a quarterly cash dividend of $0.16 per common share, which represents a 3% increase over the previous quarterly dividend. The dividend is payable March 31, 2016 to shareholders of record at the close of business on March 17, 2016.