The Western Union Company (NYSE: WU) today reported financial results for the 2012 fourth quarter and full year, and its financial outlook for 2013. The Company’s full year revenue and operating margin were consistent with the updated 2012 outlook provided on October 30, 2012.
For the full year, the Company reported a 3% revenue increase, or a pro forma constant currency revenue increase of 1% adjusting for the impact of the Travelex Global Business Payments (TGBP) acquisition. Cash provided by operating activities reached approximately $1.2 billion in 2012, with over $1 billion returned to shareholders through dividends and share repurchases.
Western Union’s 2013 strategies are focused on three key initiatives: strengthening consumer money transfer; driving customer growth and usage in Western Union Business Solutions; and generating and deploying strong cash flow for shareholders.
- Strengthening consumer money transfer. To drive renewed growth in consumer money transfer the Company is implementing several key actions, including: improving the consumer value proposition by making pricing investments in key corridors and enhancing services and the customer experience; continuing to expand the digital and electronic account based money transfer channels; and further expanding the agent network.Western Union began implementing pricing investments in key corridors in late 2012, with additional actions still in progress. Early results from these investments are meeting the Company’s overall objectives, as the actions have driven the transaction and usage increases expected in the initial weeks.The Company also plans to continue connecting the cash and digital worlds for its consumers. Digital and electronic account based money transfer channels delivered strong growth and new customer acquisition in 2012, and actions are planned to accelerate usage in 2013 through added capabilities, enhanced value propositions, and expanded reach. Westernunion.com money transfer transactions increased over 40% in 2012, while transactions for electronic account based money transfer through banks increased over 50%.
- Driving growth in customers and usage in Western Union Business Solutions. To maximize the long-term opportunity in business-to-business payments, Western Union Business Solutions is continuing to increase its product offerings, expand to new markets, and improve sales force effectiveness to drive new customer acquisition and growth opportunities with existing customers. The Company anticipates revenue growth will accelerate as these initiatives take hold throughout 2013.
- Generating and deploying strong cash flow for shareholders. Western Union is targeting generating cash flow from operating activities of approximately $900 million in 2013, or approximately $1 billion excluding anticipated final tax payments related to the agreement announced with the Internal Revenue Service in December 2011 (IRS Agreement), and returning approximately $700 million to shareholders through share repurchases and dividends.
The Company expects pricing and other investments to result in revenue and operating profit declines in 2013, but lead to growth in 2014 and 2015 as a result of increased consumers and usage, additional products and services, and the benefits from the cost savings initiatives.