Western Union Co., the world's biggest money-transfer business, has reported that its fourth-quarter profit fell, and it forecast little or no revenue growth for 2010.
Net income declined 6.6% from a year earlier, to $223.7 million, or 32 cents a share, the company said on Tuesday.
Earnings per share matched the average of estimates by 24 analysts in a Bloomberg survey, but the share price plunged as much as 11% Wednesday, the biggest drop in more than a year, on the company's pessimistic forecast.
Western Union, which cut transaction fees in the United States in the fourth quarter to reverse a slump in domestic sales, said revenue this year would fall in a range of 2% growth to a 1% decline.
The Englewood, Colo., company forecast full-year earnings per share of $1.29 to $1.34.
"We believe this outlook is disappointing and seems to contemplate a cautious view on global remittance growth in 2010," Jason Kupferberg, an analyst at UBS Securities LLC, said in a research note.
Christina Gold, Western Union's chief executive officer, said transactions climbed in the fourth quarter after she adopted uniform pricing for transactions originated in the United States and offered holiday promotions including a $5 fee for money transfers of up to $50.
"We saw a tremendous pickup after having many quarters of negative growth," she said in an interview Wednesday.
Consumer-to-consumer transactions rose 5%, to 51.4 million in the quarter, compared with a year earlier.
Global business payments declined 4%, to 99.3 million.
Sales increased in Europe, Asia, Africa and the Middle East.
Revenue from consumer-to-consumer payments between the United States and Mexico fell as the 10% U.S. unemployment rate limited the ability of migrant workers to send money home.
Total revenue for the quarter grew 2%, to $1.3 billion, compared with a year earlier, the company said.
For the full year, revenue declined 4%, to $5.1 billion. Expenses grew 4% in the fourth quarter, to $995.4 million, driven by costs associated with the company's Sept. 1 purchase of Custom House Ltd., a provider of business-to-business international payment services.
Western Union, which paid $400 million to buy back 24.8 million shares last year at an average price of $16.10, said it may repurchase up to $1 billion more.
The company's share price was off 5.2%, at $17.88, late Wednesday morning, after falling as low as $16.70, the biggest drop since October 2008, earlier in the session.
The shares had gained 36% in the 12 months through Tuesday.