DENVER-
Western Union Co. on Tuesday reported a 12 percent drop in net income for the first quarter, partly due to expenses related to its spinoff from First Data Corp.
The money transfer services company reported net income of $193.2 million, or 25 cents per share, for the first three months of the year, down from $219.8 million, or 29 cents per share, in the same period a year ago.
Revenue for the quarter was $1.1 billion, up 8 percent from $1 billion a year ago.
The per-share results matched the average estimate of analysts surveyed by Thomson Financial.
Western Union was spun off by First Data Corp. last year. Its first-quarter results included $15 million of expenses to add staff and replace various payroll, public affairs and other services First Data had provided, the company said.
International customers helped fuel the growth in consumer-to-consumer revenue, with international transactions rising 21 percent and revenue growing 15 percent. Business in India has been hot, with transactions growing at least 90 percent each of the past six quarters, Chief Executive Christina Gold said.
“The opportunity here is huge. Based on the World Bank’s current market size projections, we believe that India now ranks as one of the largest receivers of remittances with over $20 billion per year,” she said.
Domestically, Western Union faces challenges with its online service, Westernunion.com. Compromises of retailers’ databases unrelated to Western Union have led issuing banks to balk at accepting credit and debit cards for online transactions, Gold said.
Westernunion.com is adding anti-fraud measures in the U.S., leading to a loss of transactions that could drop revenue $20 million to $30 million for the online business, the company said. The same issues have not been seen internationally, Gold said.
Western Union continues to be challenged by fallout over the immigration debate in the U.S., leading it to offer more promotions aimed at workers sending money to support their families.
Larry Berlin, an analyst with First Analysis Securities Corp., said it would take time to compensate for a weaker domestic market, even as international business grows.
“Investors have to get used to the idea that international is less profitable than domestic, because you have to charge less, and the average transaction is smaller,” he said.
The results were announced after the market closed. Western Union shares closed up 8 cents to $22.93 Tuesday on the New York Stock Exchange, then fell $1.37, or 6 percent, in after-hours trading.
Management said it still expects earnings per share of $1.07 to $1.11 for the year but dropped its estimate of revenue growth to 10 percent to 11 percent, down from the previous estimate of 11 percent to 13 percent.
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