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UPDATE 2-Western Union sees revenue, profit growth in 2014
May 1, 2013 / 1:45 AM / 4 years ago

UPDATE 2-Western Union sees revenue, profit growth in 2014

* 1st-qtr profit $0.37/share vs $0.40 year earlier

* Revenue down 5 pct at $1.33 bln

* Revenue from consumer business falls 7 pct

* Backs full-year EPS guidance of $1.33-$1.43

By Neha Dimri

April 30 (Reuters) - Western Union Co said it was confident it would return to revenue and profit growth in 2014 and stuck to its guidance for the current year, saying it was making progress in bolstering its consumer money transfer business.

The world’s largest money transfer company is cutting prices and investing in new technology to fight competition and regain lost market share in a remittances market that the World Bank estimates hit $529 billion last year.

Quarterly net income fell 14 percent as price cuts reduced transaction fees but transaction volumes in the key market of Mexico increased and the company stood by its full-year earnings forecast of $1.33 to $1.43 per share.

“We are confident we have the plans in place, and we have seen signs in the first quarter that will allow us to return to revenue and profit growth in 2014,” Chief Financial Officer Scott Scheirman told Reuters.

Morningstar analyst Brett Horn said it was key that the company had stuck to its guidance.

“This is a transitional year for the company and sticking with the guidance they provided suggests that they feel like they’ve got their hands around that process.”

Western Union’s firm grip on consumer remittances has been slipping after it lost last year an exclusive arrangement with a major Mexican financial services group that agreed to also deal with smaller rival MoneyGram International Inc.

Exclusive agency deals are also under threat elsewhere. Western Union had said in an earlier filing that proposed laws in some countries in Africa, south Asia and eastern Europe would prevent such deals with agents.

Nimbler online players such as Boom Financial Inc and Xoom Corp, which went public in February, are also challenging Western Union’s dominance.

First-quarter net income fell to $212 million, or 37 cents per share, from $247.3 million, or 40 cents per share, a year earlier.

Analysts on average had expected earnings before items of 32 cents per share on revenue of $1.34 billion, according to Thomson Reuters I/B/E/S.

Total revenue fell 5 percent to $1.33 billion, while revenue from its consumer business, which accounts for nearly 80 percent of its total business, fell 7 percent during the quarter.

But price cuts helped Western Union-branded transactions in Mexico increase 9 percent during the quarter and revenue from the company’s electronic channels -- which include, account-based money transfer and mobile money transfer -- rose 18 percent in the quarter.

The Englewood, Colorado-based company’s shares, which have gained about 3.5 percent since its last quarterly results, closed at $14.81 on the New York Stock Exchange on Tuesday and were unchanged after hours.

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