Earnings of the Western Union Company (NYSE:WU) Spiked Up Due to its Cost Cutting Strategies


The Western Union Company (NYSE:WU), on October 30, 2014, announced its third quarter’s EPS of $0.44. The figures were up by 13 percent on yearly basis. The company also saw a 2 percent increase in its revenue figures. It also revised its guidance for the year 2014 and suggested a total EPS of $1.50 due to increased operating margins.

The biggest money-transfer firm of the world, The Western Union Company (NYSE:WU), operates in three types of businesses, and it breaks its revenues accordingly. These types include Consumer to Business (C2B), Consumer to Consumer (C2C) and Business Solutions.

The revenues of Consumer to Consumer (C2C) segment increased by 4 percent due to a 5 percent rise in transactions. This segment of the company was responsible for bringing in almost 80 percent of the company’s total revenues. The Consumer to Business (C2B) revenue spiked up by 11 percent, and was responsible for making up 11 percent of the total revenue figures. As far as Business Solution segment is concerned, it brought 7 percent of the total revenues to the company.

The Western Union Company (NYSE:WU) announced a 21 percent revenue growth on 34 percent transaction growth, which is now responsible for making up 4 percent of the total revenue, including the C2C sales.

The Western Union Company (NYSE:WU) is planning on launching its site to new markets, for the yearly online growth rate has become stagnant. As far as the operating margins are concerned, the figures increased from 21 percent to 21.8 percent due to the cost cutting strategies employed by the company.

The company is not as much concerned with the price as it was a year ago, for the company has cut down its prices by quite a margin due to competitive strategies, lowering its profitability in the course. The chief financial officer of the company, Rajesh K. Agrawal, during the company’s recent meeting, remarked that The Western Union Company (NYSE:WU) believes that the prices prevailing is the market are considerably low. He further said that the company has made many price adjustments; some of which involve increases whereas the others involve reductions. CFO ended his speech by saying that the company will keep its prices modest for the rest of the year.
The Western Union Company (NYSE:WU) revised its full year guidance, and brought its EPS to $1.50 from $1.45. It also set its operating margin at 20 percent.

The management of The Western Union Company (NYSE:WU) announced that the cost savings would be balanced by some extra spending during the fourth fiscal quarter. The costs of compliance expenditure for the fourth quarter are expected to increase to 3.5 percent from a previously predicted rate of 3 percent.

Coming to the stock prices of The Western Union Company (NYSE:WU), the company, on the last trading day, November 7, 2014, opened its stocks at a price of $17.93 and closed at a price of $17.88, after hitting the highest figures of $18.13.