The Western Union Company (WU) has reported a 6.63 percent fall in profit for the quarter ended Sep. 30, 2016. The company has earned $216.90 million, or $0.44 a share in the quarter, compared with $232.30 million, or $0.45 a share for the same period last year. Revenue during the quarter went down marginally by 1.53 percent to $1,377.80 million from $1,399.20 million in the previous year period. Gross margin for the quarter contracted 132 basis points over the previous year period to 40.27 percent. Total expenses were 79.80 percent of quarterly revenues, up from 78.24 percent for the same period last year. That has resulted in a contraction of 156 basis points in operating margin to 20.20 percent.
Operating income for the quarter was $278.30 million, compared with $304.50 million in the previous year period.
"Our diversified global business and strategic initiatives enabled us to deliver another solid earnings performance in the quarter, as we successfully navigated currency headwinds and macro challenges in international markets," said president and chief executive officer Hikmet Ersek. "While results in oil dependent countries softened, our U.S. business remained strong, and westernunion.com money transfer transaction growth accelerated to 29%."
For financial year 2016, The Western Union Company forecasts operating income to grow at 20 percent. It expects diluted earnings per share to be in the range of $1.60 to $1.70 for the same period.
Operating cash flow improves marginally
The Western Union Company has generated cash of $821.90 million from operating activities during the nine month period, up 2.20 percent or $17.70 million, when compared with the last year period. The company has spent $233.90 million cash to meet investing activities during the nine month period as against cash outgo of $317.90 million in the last year period.
The company has spent $623.20 million cash to carry out financing activities during the nine month period as against cash outgo of $855.10 million in the last year period.
Cash and cash equivalents stood at $1,280.70 million as on Sep. 30, 2016, down 9.45 percent or $133.70 million from $1,414.40 million on Sep. 30, 2015.
Debt comes down
The Western Union Company has recorded a decline in total debt over the last one year. It stood at $3,224.80 million as on Sep. 30, 2016, down 7.43 percent or $259 million from $3,483.80 million on Sep. 30, 2015. Total debt was 33.88 percent of total assets as on Sep. 30, 2016, compared with 35.49 percent on Sep. 30, 2015. Debt to equity ratio was at 2.32 as on Sep. 30, 2016, down from 2.59 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 6.72 for the quarter from 7.22 for the same period last year.
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