* Company counting on large U.S. branch network, online
* First-quarter earnings/share $0.37 vs est. $0.35
* Reaffirms full-year profit forecast
(Adds CFO and analyst comment, background)
By Neha Dimri
May 1 Western Union Co, the world's
largest money-transfer company, is counting on its huge U.S.
branch network to fend off looming competition from Wal-Mart
The company's interim chief financial officer, Raj Agrawal,
also told Reuters on Thursday that competition from the world's
biggest retailer would not force Western Union to become more
aggressive on pricing.
Wal-Mart said last month it would launch a money transfer
service to broaden the financial services it offers to its
low-income customers and boost store traffic.
Western Union has already cut prices and invested heavily in
its online and mobile businesses to better compete with
fast-growing rivals such as MoneyGram International Inc,
Xoom Corp and privately owned Boom Financial Inc.
Agrawal, speaking after Western Union reported a
stronger-than-expected quarterly profit, noted that his company
had 46,000 U.S. locations, compared with Wal-Mart's 4,000, and
that it operated in big cities and high traffic areas.
"So we provide convenience that customers cannot find with a
Big Box store type of offering," he said, questioning whether
customers would give up convenience to save a few dollars.
Customers of the Wal-Mart service will be able to transfer
$50 for a fee of $4.50, compared with $5.00 at Western Union.
Unlike Western Union, Wal-Mart will not offer online
transactions or transfers at its international locations.
Western Union reaffirmed its full-year earnings forecast,
unlike MoneyGram, which slashed its profit forecast earlier this
week, citing Wal-Mart's entry into the market.
Western Union, like is rivals, is facing increased
compliance costs as regulators crack down on money laundering.
However, Agrawal said Western Union was in a stronger
position to absorb the increased costs, which in the long term
would give it a competitive advantage.
BTIG analyst Mark Palmer agreed. "Western Union is poised to
take market share from competitors unable to adjust to
industry-wide compliance cost increases," he said in a research
Western Union, which has about 20,000 locations in Russia
and 15,000 in Ukraine, said it had not seen any material impact
so far as from the crisis in the region.
Western Union said in March it had suspended its services
for Russia's Bank Rossiya after the imposition of U.S.
sanctions. The company derives about 2 percent of its revenue
from its Russian operations.
EARNINGS BEAT ESTIMATES
Western Union's better-than-expected results reflected a 9
percent rise in volumes in the company's consumer-to-consumer
business to 60.24 million in the first quarter ended March 31.
Consumer-to-consumer transactions account for about 80
percent of the company's revenue, with the rest coming from
consumer payments to businesses and payments between businesses.
Westernunion.com's consumer-to-consumer transactions
increased 55 percent in the quarter.
Western Union, which gets most of its business from migrant
workers sending money home, said its net income fell 4 percent
to $203 million, or 37 cents per share, in the first quarter,
mainly due to a rise in expenses. Revenue rose 2 percent to
Analysts expected Western Union to earn 35 cents per share
on revenue of $1.36 billion.
Western Union's shares were trading at $16.00 in extended
trading after closing at $15.85 on Thursday on the New York
(Reporting By Neha Dimri in Bangalore; Additional reporting by
Aman Shah; Editing by Savio D'Souza)