MasterCard's Profit Tops Expectations--Update
30 October 2015 - 3:00AM
Dow Jones News
By Robin Sidel And Chelsey Dulaney
Payment-card network MasterCard Inc. on Thursday reported
stronger-than-expected earnings for its third quarter, though an
increase in rebates and other incentives to customers dented
revenue growth.
The Purchase, N.Y.-based company's results recently have been
pressured across the world from a strong U.S. dollar, particularly
when compared with the euro and the Brazilian real.
In a conference call with analysts, Chief Executive Officer Ajay
Banga said the company's results have been affected by slower
global growth in smaller emerging markets and worsening economic
conditions in Venezuela.
Mr. Banga cited Mexico as a bright spot for the company due to
strong consumer spending.
For the period ended Sept. 30, the company posted earnings of
$977 million, or 86 cents a share, compared with $1.02 billion, or
88 cents a share, a year earlier. The results included a $50
million after-tax charge related to the termination of a U.S.
employee pension plan.
Excluding that charge, per-share earnings were 91 cents.
Revenue grew 1.6% to $2.53 billion, or 8% excluding currency
impacts.
Analysts had projected 87 cents a share in profit and $2.54
billion in revenue, according to Thomson Reuters.
Like rival Visa Inc., MasterCard processes electronic payments
on its network, but doesn't collect interest or set interest
rates.
In the latest quarter, purchase volume grew 12%, on a
constant-currency basis, to $852 billion. Processed transactions
grew 12% to 12.3 billion, while cross-border volumes grew 16%.
Gross dollar volume grew 13%, in terms of local currency, to
$1.2 trillion.
In the weeks since the quarter ended on Sept. 30, trends through
Oct. 21 have been steady to slightly weaker, said Chief Financial
Officer Martina Hund-Mejean.
The company suffered a blow earlier this week when large issuer
USAA told customers it is switching its credit and debit portfolios
from MasterCard to Visa. USAA had been a longtime MasterCard issuer
and was one of its largest customers.
"The fact is that we tried our best to pursue that business, but
at a point we lost out," Mr. Banga said in response to an analyst's
question. The company previously said the loss wouldn't affect its
outlook for revenue and profits.
JetBlue Airways Corp. said Tuesday that it signed a deal for a
new co-brand card with issuer BarclayCard and MasterCard. The Wall
Street Journal reported earlier this year that JetBlue wasn't
renewing its co-brand arrangement with American Express Co.
Write to Robin Sidel at robin.sidel@wsj.com and Chelsey Dulaney
at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
October 29, 2015 11:45 ET (15:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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