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Analysis - Western Union Q1 results

May 13, 2008

Analysis of:Western Union 1Q profit rises 7 percent on international | biz.yahoo.com

· C2C is the key driver of the business. Margin growth performance was good here probably due to the increasing reliance on international business where there is the opportunity to earn foreign exchange revenue as well as fee income. · International growth looks very strong and better than many in the market (of course not many companies report publicly available data). This will continue to be the growth engine for the business. WU may need to increase their management and physical presence outside of the US to maximise this growth. . WU continues to suffer on domestic transactions and revenue (USA and Canada domestic business). Whilst transactions declined probably as a result of substitution by other products of more concern is the decline of revenue which fell 8% compared to only a 3% decline in transactions. This shows that margins are being squeezed and more of this can be expected in the future.

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