Western Union 4Q net income drops revenue flat

Western Union fourth-quarter net income dives from year-ago period helped by one-time gains

Associated Press

ENGLEWOOD, Colo. (AP) -- Western Union's net income fell 47 percent in the fourth quarter compared with a year-ago quarter that was helped by one-off gains.

The payments company, based in Englewood, Colo., said Tuesday that it expects more tough times in 2013 as it invests in cost-saving plans and cuts prices. It said the strategy will lead to stronger financial results in 2014 and 2015 as more products and services become available.

"We have a solid strategy for growth. Our foundation is strong, with a valued brand, global network, and worldwide operations and expertise," President and CEO Hikmet Ersek said in a statement.

Net income fell to $237.9 million, or 40 cents per share, from $452.3 million, or 73 cents per share a year earlier. Excluding one-time items, adjusted profit was 42 cents per share in the recent quarter.

Total revenue in the quarter was virtually flat at $1.42 billion.

Analysts polled by FactSet had expected adjusted earnings of 35 cents on revenue of $1.40 billion.

Expenses rose 6 percent to $1.14 billion from the year-ago quarter. The previous year's expenses were offset by gains of $20 million from reassessing a stake in a joint venture and $21 million related to derivative contracts.

Western Union is spending heavily to integrate Travelex Global Business Payments, which it bought in November 2011 for $973.8 million. Travelex provides international payments services to business clients, mostly small and medium-size companies and distribution partners.

The ongoing cost of combining the companies reduced Western Union's per-share earnings by 2 cents in the quarter ended Dec. 31.

Western Union expects 2013 earnings of $1.33 to $1.43 per share and "low single digit" declines in revenue.

Western Union plans to spend $45 million this year to reduce its payroll and outsource some operations. That's expected to generate savings of $30 million in 2013 and $45 million in 2014.

Analysts surveyed by FactSet forecast earnings this year of $1.48 per share.

The Western Union Co. shares fell 42 cents, or 2.9 percent, to $13.92 in after-hours trading.

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