By a News Reporter-Staff News Editor at Investment Weekly News -- The Western Union Company (NYSE: WU) reported financial results for the 2013 fourth quarter and full year, and its financial outlook for 2014. The Company also announced that its board of directors approved a new $500 million share repurchase authorization, which expires June 30, 2015.
For the full year, the Company reported a revenue decline of 2%, or 1% on a constant currency basis, and earnings per share of $1.43, which was at the high end of the outlook range provided at the beginning of the year. Cash provided by operating activities reached approximately $1.1 billion in 2013, with $671 million returned to shareholders through dividends and share repurchases. The results were consistent with the Company's financial outlook, as revenues and profits were impacted as expected by the implementation of pricing and other strategic investments that were intended to help drive future growth, as well as by increased compliance costs.
"We made good progress executing the key strategic actions we began to implement in late 2012," said President and Chief Executive Officer Hikmet Ersek. "Our pricing investments and emphasis on digital expansion drove acceleration in consumer money transfer transaction growth. We established a strong business-to-business foundation, with renewed focus on sales and product development. And we initiated important efficiency initiatives to further streamline our long-term cost structure, while still generating over $1 billion of operating cash flow."
The Company's 2014 outlook projects low to mid-single digit constant currency revenue growth and EPS in a range of $1.40 to $1.50. The outlook reflects the impact of increases in compliance costs and changes in certain compliance procedures, as previously disclosed. Fourth Quarter 2013 Results Fourth quarter revenues were flat compared to the prior year period, and increased 1% on a constant currency basis. Consumer-to-consumer (C2C) revenues declined 1%, and were flat constant currency, as transaction gains were offset by the impact of previously implemented price reductions in certain corridors.
Total C2C transactions increased 9% in the fourth quarter, driven primarily by continued traction from the pricing investments which the Company began to implement in the fourth quarter a year ago and strong electronic channel growth.
Consumer-to-Business (C2B) revenues declined 2%, or increased 5% constant currency.
Western Union Business Solutions revenues increased 8%, or 12% constant currency.
GAAP operating margin was 16.8%, which compares to 20.1% in the fourth quarter of 2012. The margin decline relates primarily to the impact of pricing and other strategic investments, higher compliance expense, and lower compensation expense in the prior year period, partially offset by lower marketing expense. Fourth quarter results included $33 million of expenses related to cost savings initiatives, as additional actions were implemented to drive future cost savings.
Earnings per share of $0.31 in the fourth quarter compares to $0.40 in the prior year period. Fourth Quarter Progress on Key Strategies Strengthen consumer money transfer The pricing investments intended to regain customer momentum continued to drive increased transaction volumes and usage. The investments helped deliver accelerated transaction growth in the second half of the year, as expected. In the fourth quarter, C2C transactions increased 20% in the corridors in which pricing investments had been implemented, or 15% excluding digital. Mexico transactions increased 20% in the quarter.
Keywords for this news article include: Western Union, Investment and Finance.
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