By Tess Stynes
Western Union Co.'s (WU) third-quarter earnings rose 12% as the
world's largest provider of remittances unveiled a series of new
efforts to drive growth and reduce costs.
For the year, the company lowered its per-share earnings
estimate to $1.65 to $1.68 on revenue growth of 4% to 5% excluding
currency impacts, compared with its increased July view for profit
of $1.73 to $1.77 and revenue growth of 6% to 8% excluding currency
impacts.
The company also said it is raising its quarterly dividend by
25% to 12.5 cents a share and unveiled a new $550 million stock
buyback authorization, bring the potential stock repurchases up to
about $750 million through the end of 2013.
Continuing economic problems in Europe and a stagnant U.S. job
market have weighed on the payments sector recently. Western Union
is particularly sensitive to swings in the economy, as its services
are primarily used by consumers to send money to customers
typically in foreign locations.
President and Chief Executive Hikmet Ersek on Tuesday said that
as the year has progressed "the market environment in consumer
money transfer has become more difficult, especially in recent
months." As a result, the company is implementing a series of
strategic actions, with a focus on enhancing transaction growth,
continuing to invest in the fast growing digital channels, and
further reducing costs. However, he said the company remains "very
confident about the long-term prospects for the business."
The company is aiming to save $30 million a year by 2014 and
expects that about $30 million of expenses related to the moves
will be incurred during the fourth quarter.
Mr. Ersek said the plans are expected to have a negative impact
on results next year and 2013 revenue excluding currency impacts
will decline slightly while per-share operating income may drop 10%
to 15% from 2012 levels. Western Union plans to give its outlook
for 2013 when it releases its fourth-quarter results in
February.
Western Union reported a profit of $269.5 million, or 45 cents a
share, up from $239.7 million, or 38 cents a share, a year earlier.
Excluding items such as integration and restructuring charges,
earnings were up at 46 cents from 40 cents.
Revenue increased 0.8% to $1.4 billion. Excluding currency
impacts, the growth was 3%.
Analysts polled by Thomson Reuters most recently forecast
earnings of 45 cents on revenue of $1.47 billion.
Operating margin was flat at 25.7%.
In the company's consumer-to-consumer segment, its largest
business, revenue fell 4% as transactions increased 5%.
Shares closed Friday at $17.93. Markets were closed Monday and
Tuesday owing to Hurricane Sandy.
Write to Tess Stynes at tess.stynes@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires