MoneyGram Ekes Out Profit Growth

The money-transfer company raises guidance for the year.
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MoneyGram

(MGI) - Get Report

on Wednesday posted a 1.7% rise in third-quarter profits Wednesday, as a 20% jump in revenue was partially offset by weaker margins.

The money-transfer service provider earned $30 million, or 35 cents a share, in the quarter, compared with $29.5 million, or 34 cents a share, a year ago. Analysts surveyed by Thomson First Call were expecting earnings of 33 cents a share in the quarter.

Third-quarter total revenue rose to $296.4 million from $246.4 million, topping analysts' expectation of $286.4 million.

Revenue at the company's global funds transfer segment rose 27% to $213.5 million, as a result of money transfer volume growth and a higher yield on the investment portfolio related to the money order business. The payment systems segment revenue rose 4.5% to $82.5 million in the quarter due to higher short-term interest rates.

MoneyGram's bottom line was hit by lower margins, which weakened by the absence of income from previously impaired investments and from limited partnership interests. In addition, the company recorded costs from marketing and expansion in Western Europe.

For fiscal 2006, the Minnneapolis-based company expects to earn between $1.43 to $1.46 a share, up from an earlier forecast of $1.37 to $1.42 a share.

The full-year estimate includes income of about 9 cents a share from cash flows from previously impaired investments and income from limited partnership interests. Analysts anticipate earnings of $1.45 a share.

It expects net revenue, which excludes commissions, to be between $590 million to $600 million, up from previous guidance of $565 million to $590 million.

The company's shares were up 45 cents, or 1.5%, to $31.10 in after-hours activity Wednesday.

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