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MasterCard Q4 Profit Tops Estimates

MasterCard Q4 Profit Tops Estimates
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1/31/2013 9:32 AM ET

MasterCard Inc. (MA: Quote) on Thursday reported a profit for the fourth quarter that soared from last year, when results included a provision for litigation settlement. In addition, revenues for the latest quarter benefited from growth in volumes and processed transactions. Adjusted earnings per share topped analysts' expectations.

Purchase, New York-based MasterCard's worldwide purchase volume for the fourth quarter rose 13 percent from last year on a local currency basis to $727 billion. Purchase volume in the Asia Pacific/Middle East/Africa or APMEA region rose 23 percent on a local currency basis, while Latin America recorded 16 percent increase. Purchase volume in the U.S., MasterCard's biggest market, rose 7 percent.

Ajay Banga, MasterCard president and CEO said, "We are pleased with our fourth-quarter results, which saw double-digit growth in net revenue, cross-border volume and processed transactions. We are gaining traction in our U.S. credit business with some recent wins, continuing to experience momentum in our mobile initiatives around the world, and securing important business in emerging markets like Africa and Brazil."

The credit card service provider's net income for the fourth quarter was $605 million or $4.86 per share, up sharply from $19 million or $0.15 per share in the prior-year quarter.

The prior-year quarter's results include a provision for litigation settlement of $770 million or $3.88 per share.

Adjusted earnings for the latest quarter were $4.86 per share, compared to adjusted earnings of $4.03 per share in the same period last year. On average, 33 analysts polled by Thomson Reuters expected the company to report earnings per share of $4.81 for the quarter. Analysts' estimates typically exclude one-time items.

Net revenue for the quarter rose 10 percent to $1.90 billion from $1.73 billion in the year-ago period. Analysts had a consensus revenue estimate of $1.89 billion. The increase in revenues reflect 14 percent growth in gross dollar volume on a local currency basis, in addition to a 20 percent increase in processed transactions and a 17 percent increase in cross-border volumes.

These factors were partly offset by an increase in rebates and incentives, primarily due to new and renewed agreements as well as higher volumes. Adjusted for currency, net revenue increased 12 percent from last year.

As at quarter-end, MasterCard's customers had issued 1.9 billion MasterCard and Maestro-branded cards.

During the quarter, MasterCard repurchased 1.3 million shares of class A common stock at a cost of about $613 million. Quarter-to-date through January 25, the company repurchased an additional 322,000 shares at a cost of about $165 million, with $440 million remaining under the current repurchase program authorization.

For fiscal 2012, MasterCard's net income increased to $2.76 billion or $21.94 per share from $1.91 billion or $14.85 per share in the previous year. Adjusted earnings per share for the year were $22.04, compared to adjusted earnings of $18.70 last year.

Net revenue for the year increased 10 percent to $7.39 billion from $6.71 billion in the prior year. Adjusted for currency, net revenue grew 13 percent.

Analysts expected the company to earn $22.00 per share for the year on revenues of $7.39 billion.

MA closed Wednesday's trading at $516.00. In Thursday's pre-market, the stock is up $19.04 or 3.69 percent to $535.04.

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by RTT Staff Writer

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