* Q2 adj EPS $0.46 vs est $0.43
* Raises FY EPS view to $1.68-$1.72 from $1.65-$1.70
By Sharanya Hrishikesh
July 24 Western Union Co, the world's
largest payment transfer company, raised its full-year profit
forecast due to a one-time tax gain in the second quarter, but
said a deteriorating global economy is expected to weigh on its
business payments unit.
The company bought Travelex's global business payments unit
for about $970 million last year to bulk up its products to
businesses and help ride out slowing growth in its consumer
segment, which accounts for more than 80 percent of its revenue.
"Performance of the acquisition has been disappointing,
largely due to a slowdown in global trade, which is a big driver
of growth for Travelex," David Togut of Evercore Partners said.
Chief Executive Hikmet Ersek agreed that revenue at the unit
has "come a little short because of global trends."
Western Union now expects the business payments unit to post
pro-forma constant currency revenue growth in the mid-single
digits in the year. It had earlier expected the unit to post low
double-digit constant currency revenue growth.
The business solutions segment, which lets companies
transfer money across countries, contributed 6 percent to total
revenue in the second quarter ended June 30.
For the full year, it expects to earn between $1.68 and
$1.72 per share, up from its earlier forecast of $1.65 to $1.70
The company maintained its full-year revenue forecast, but
cut its operating margin forecast by 50 basis points to 24.5
percent as it expects higher compliance costs, mainly related to
remittance disclosure rules associated with the Dodd-Frank
Revenue from electronic channels, which includes
westernunion.com, account based money transfer, and mobile money
transfer, grew 26 percent. The channels contribute 3 percent to
PREPAID REVENUE RISES
The company, whose prepaid cards were available at about
22,000 retail locations around the world at the end of the
quarter, recorded a 6 percent rise in prepaid revenue.
"We expect prepaid revenue growth to increase in the second
half of the year, as we benefit from greatly expanded
distribution in the U.S. and some of the international
introductions," CEO Ersek said on a post-earnings conference
call with analysts.
Prepaid revenue currently contributes about 1 percent to
Western Union's total revenue, but Ersek expects the
contribution to increase in the near term.
Net income climbed 3 percent to $271.2 million, or 44 cents
per share, while revenue rose 4 percent to $1.43 billion.
Shares of the company were up 2 percent at $17.25 in
late-afternoon trading on Tuesday on the New York Stock