Western Union Profit Falls 27% On Higher Costs

(RTTNews) - Western Union Co. (WU) said Tuesday after the markets closed that its fourth quarter profit fell 27% from last year, hurt by higher costs and expenses.

"We made good progress executing the key strategic actions we began to implement in late 2012," said Western Union President and Chief Executive Officer Hikmet Ersek. "Our pricing investments and emphasis on digital expansion drove acceleration in consumer money transfer transaction growth."

The company also said that its board of directors has approved a new $500 million share repurchase authorization, which expires June 30, 2015.

Western Union shares are currently gaining 2.33% in after hours trading after closing the day's regular trading session at $15.88, up 24 cents or 1.53%.

For the fourth quarter ended December 31, 2013, the world's largest money transfer company reported net income of $173.4 million or $0.31 per share, compared to $237.9 million or $0.40 per share for the year-ago quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to earn $0.32 per share for the fourth quarter.

Revenue for the fourth quarter remained essentially flat at $1.42 billion. Twenty-four analysts had a consensus revenue estimate of $1.43 billion for the fourth quarter.

Fourth quarter consumer-to-consumer revenues declined 1% , as transaction gains were offset by the impact of previously implemented price reductions in certain corridors.

Total consumer-to-consumer transactions increased 9% in the fourth quarter, driven mainly by continued traction from the pricing investments which the company began to implement in the fourth quarter a year ago and strong electronic channel growth. Consumer-to-Business revenues for the quarter declined 2%. Western Union Business Solutions revenues increased 8%.

Total costs and expenses rose 4% to $1.2 billion in the fourth quarter. Operating margin for the quarter narrowed to 16.8% from 20.1% a year ago, mainly due to the impact of pricing and other strategic investments, higher compliance expense. The latest quarter results included $33 million of expenses related to cost savings initiatives, as additional actions were implemented to drive future cost savings.

Looking forward to the full year 2014, the company forecasts flat to low single digit revenue growth and earnings of $1.40 to $1.50 per share. Analysts currently expect the company to earn $1.45 per share on revenue growth of 2.90% for the fourth quarter.