MoneyGram International Inc. once again produced strong revenue growth during the fourth quarter fueled by introducing funds-transfer services to developing nations. But costs associated with retiring debt and restructuring the company to become more competitive cut deeply into its profits during the quarter.
The Dallas-based funds-transfer company added 8,000 agent locations in Russia, Eastern Europe, Latin America, Africa and India during the quarter ended Dec. 31, bringing its total global agent locations to 267,000, up 17.6% from 227,000 a year earlier, MoneyGram announced in its Feb. 3 earnings report.
Despite economic turbulence in certain European countries, overall funds transfers and fees grew during the quarter, and the company expects to see 7% to 9% revenue growth this year, Pamela Patsley, MoneyGram chairman and CEO, told analysts during an earnings conference call.
Online and mobile channels represent promising growth opportunities for the firm this year, Alex Holmes, MoneyGram senior vice president of investor relations and strategic development, told analysts. A cobranded online funds-transfer service introduced during the quarter with Wal-Mart Inc. is helping MoneyGram reach new customers, he said.
“On the mobile front, we remain very active in discussions” with mobile handset makers and wireless carriers, Holmes said, not hinting at the company’s specific plans.
And MoneyGram continues to see growth through a diverse array of retail channels.
“On the self-service side, agents and consumers clearly are demanding more flexibility at the point of sale, both on a send and receive side, for self-service capability, whether that be through an ATM, a kiosk or card-based technologies,” Holmes said.
New rules the Consumer Financial Protection Bureau issued Jan. 20 for remittance firms are unlikely to pose challenges for MoneyGram, Patsley said.
“We believe the new rule essentially standardizes across the industry our existing high level of disclosure,” she said.
Global funds-transfer revenues during the quarter rose 8.5%, to $300.2 million from $276.7 million. Funds-transfer fee and other revenue rose 6.9%, to $318.8 million from $298.3 million.
Total revenue for the quarter rose 6%, to $321.8 million from $303.5 million. Net income for the quarter was $3.1 million, down 80.9% from $16.2 million, because of costs associated with extinguishing debt and the expense of an ongoing corporate-restructuring effort, Shields said.
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