Western Union Co.'s (WU) second-quarter earnings edged higher
despite restructuring charges, with profit topping analysts'
expectations amid higher transaction volumes.
As such, the payment-transfer company projected 2010 earnings of
$1.31 to $1.36 a share, excluding restructuring charges, and raised
its revenue forecast, minus currency changes, by one percentage
point. Analysts polled by Thomson Reuters on average estimated
earnings of $1.32.
Chief Operating Officer and Chief Executive-elect Hikmet Ersek
said the second-quarter results demonstrate the benefits of the
company's diversified geographic portfolio. Although the global
economy remains challenging in many parts of the world, overall
business continues to improve.
Demand for money transfers diminished during the recession amid
the high unemployment in the U.S., while strong transfer volume in
Europe and Asia partly offset the softness. As part of a resulting
cost-cutting effort, the company in May announced plans to
streamline its operations, with executive numbers being trimmed and
facilities closed. The plans include the elimination of 175
positions and migration of work now performed by another 550.
Western Union reported a second-quarter profit of $221 million,
or 33 cents a share, up from $220.2 million, or 31 cents a share, a
year earlier. Shares outstanding fell 4.4%. The latest quarter
included 3 cents of charges. Revenue increased 2% to $1.27 billion
and rose 3% on a constant-currency basis.
Analysts polled by Thomson Reuters most recently estimated
earnings of 32 cents and $1.28 million.
Operating margin fell to 24.4% from 27.2% as overhead costs
climbed 11%.
Revenue in Western Union's consumer-to-consumer segment, the
company's largest revenue source, rose 2% in constant currencies
and profit increased 6% as transactions increased 1%.
Global-payments revenue grew 9%, but profit dropped 23%.
Shares closed at $16.68 Monday and were inactive premarket. The
stock has fallen 12% this year.
-By Jodi Xu, Dow Jones Newswires; 212-416-3037;
jodi.xu@dowjones.com;