Money transfer facilitator Western Union Co. (WU), Tuesday said its profit for the first quarter declined 14 percent, as revenues dropped five percent hurt mainly by lower transaction fees at its consumer business. Nevertheless, Western Union's quarterly earnings topped Wall Street estimates, although revenues fell shy of expectations. The company also maintained its full-year financial outlook.
Chief Executive Hikmet Ersek said, "The first quarter provided signs that we are making progress with our strategies to strengthen consumer money transfer, increase customers and usage in business-to-business, and generate and deploy strong cash flow for our shareholders."
Western Union's revenue for the quarter dropped 5 percent to $1.33 billion from $1.39 billion last year. Analysts polled by Thomson Reuters expected revenues of $1.35 billion for the quarter. On a constant currency basis, the revenue drop was 4 percent.
Consumer-to-Consumer revenue, which accounts for most of the business, declined 7 percent, as transactions slid 2 percent due mainly to the impact of compliance related changes. Consumer-to-Business revenues declined 1 percent.
Englewood, Colorado-based Western Union's first-quarter profit dropped to $212.0 million or $0.37 per share from $247.3 million or $0.40 per share last year. On average, 13 analysts expected earnings of $0.32 per share for the quarter. Analysts' estimates typically exclude special items.
Operating margin for the first quarter dropped to 22.4 percent from 23.9 percent last year.
Looking ahead to fiscal year 2013, the company maintained its earnings guidance of $1.33 to $1.43 per share, with a single digit drop in constant currency revenues. Analysts currently anticipate earnings of $1.40 per share on revenues of $5.56 billion for 2013.
"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 Ersek.
WU closed Tuesday's regular trade at $14.81, up $0.17 or 1.16%, on a volume of 12.9 million shares, on the NYSE. In after hours, the shares slipped $0.11 or 0.74%.
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