3 Min Read
(Reuters) - Western Union Co (WU.N) said it would cut prices for money transfers within the United States to help fend off fierce competition and would buy back up to $1.2 billion of shares.
Shares of the world's largest money transfer company, which also raised its quarterly dividend, rose 4 percent to $19.20 in extended trading.
Western Union is cutting prices in parts of the United States where it is experiencing the maximum competitive pressures, company executives said on a conference call.
Western Union, which gets about 80 percent of its business from low-income migrant workers sending money home, said revenue in its U.S. money transfer business had been hurt by increasing competition, but it did not provide numbers.
North America accounts for 19 percent of its total revenue.
"We do not expect significant price changes in our cross-border business," Chief Financial Officer Raj Agrawal said.
Revenue from consumer remittances fell 2 percent in the fourth quarter, but revenue from its digital business, including westernunion.com and mobile money transfer, rose 17 percent.
The company has ramped up its digital business to compete with nimble online rivals such as privately owned Boom Financial Inc and Xoom Corp XOOM.O.
Xoom reported a better-than-expected quarterly profit on Tuesday as more people transferred money using its digital platform.
Edward Jones analyst Josh Olson said pricing challenges in the United States were expected and Western Union could face competitive pressures in its digital business.
Western Union said last month that it would enable customers to transfer money and pay bills using Apple Inc's (AAPL.O) mobile wallet, Apple Pay.
Western Union forecast earnings of $1.58-$1.65 per share for 2015. Analysts on average were expecting $1.59, according to Thomson Reuters I/B/E/S.
The company's net income rose 28 percent to $221.5 million, or 42 cents per share, in the quarter ended Dec. 31 as expenses fell 4 percent.
Total revenue declined 1 percent to $1.41 billion, mainly due to a stronger dollar.
Analysts on average had expected a profit of 34 cents per share and revenue of $1.44 billion.
The company raised its quarterly dividend to 15.5 cents from 12.5 cents.
Editing by Kirti Pandey