Boston, MA 02/13/2014 (wallstreetpr) – The Western Union Company (NYSE:WU) which is the world’s largest money transfer company saw its profit drop by 27 % in the fourth quarter of 2013. The drop in profit has been attributed to the increased compliance costs that continue to hurt the company’s cash balance. The company had also announced a share buyback program worth $500 million.
Western union affected by compliance costs
The Western Union Company (NYSE:WU) expects the high compliance costs that came in the fourth quarter to substantially subside in the current quarter to enable it go back to the winning ways in terms of profit margins. The Chief Finance Officer of the company is of the opinion the company will be back in terms of profits in 2014 he was quoted as saying “We expect (compliance) costs in 2014 to be 3.5 to 4 percent of our revenue … That is (also) probably the pick able range for 2015”
Western union expects earnings per share of $1.40-$1.50 for the current fiscal year due to the low –to-mid-single digit single percentage growth in revenue. The Western Union Company (NYSE:WU) intends to be less aggressive with price cuts for its money transfer products as it tries to achieve growth rates that should reap desirable profits. The company is facing competition on its money transfer platform considering its rival Money Gram posted stronger results for its fourth quarter.
The company intends to attract more customers by heavily investing in in its mobile and online businesses that should enable it compete well with its rivals such as Money Gram and Xoom Corp. This should give it the much needed boost financially, considering its net income dropped by 31 cents a share to come in at $173 million compared to $237.9 million recorded for the same quarter in F2012.
Despite the not so good results in the market, The Western Union Company (NYSE:WU) stock moved up by 2.90% in Wednesday trading session to close at a high of $16.34.
