Transfers decline but profits rise
Western Union last month posted higher second-quarter earnings despite a moderate decline in transactions in the Gulf. The US company reported a profit of US$221 million (Dh811.7m), up from $220.2m a year earlier. Revenue increased 2 per cent to $1.27 billion and rose 3 per cent on a constant-currency basis. The positive earnings come despite the company being hit by restructuring expenses amounting to $35m.
"The increased momentum we experienced in the first quarter has continued into the second, as each of our regions contributed to solid transaction growth," said Christina Gold, the president and chief executive of Western Union. "As I enter my last few weeks with Western Union I believe the foundation is solid, with a strong brand, an unmatched global network and an energised management team." International job losses and pay cuts during the global financial downturn sapped demand from migrant workers and businesses to transfer money.
Under a cost-cutting effort, the company in May announced plans to streamline its operations, with executive numbers being cut and facilities closed. Its operating margin in the second quarter fell to 24.4 per cent from 27.2 per cent in the same period last year as overheads costs climbed 11 per cent. Revenue in Western Union's consumer-to-consumer segment, the company's largest revenue source, rose 2 per cent in constant currencies and profit increased 6 per cent as transactions rose 1 per cent.
Global payments revenue grew 9 per cent but profit dropped 23 per cent. Last year it completed 196 million consumer-to-consumer transactions worldwide, moving $71bn between consumers, as well as 415 million business payments. The company has about 430,000 agent locations across 200 countries and territories. It offers money order, money transfer, payment and prepaid services. Founded in 1851, the then telegram company expanded and evolved its services in 1871 to offer electronic money transfer.
Published: August 18, 2010 04:00 AM