Western Union expects Q2 to be its weakest in 2020
LONDON: Western Union Co, the world’s largest money transfer firm, expects the second quarter to be its weakest in 2020 in terms of revenue and profit margins and is confident of improvement as Covid-19-related lockdowns ease.
The firm generated revenue of $1.2 billion in the first quarter, a fall of 11% compared with the prior-year period, on a reported basis.
“We saw improved trends in the month of April and given the various forecasts for economic growth and GDP, we think the second quarter will be the lowest quarter for us during the course of this year from a revenue and profit margins standpoint and hopefully it will improve after we get through the second quarter,” chief financial officer Raj Agrawal told Reuters.
The firm, which has operations in more than 200 countries, in March withdrew its full-year financial outlook amid the coronavirus pandemic.
Agrawal said the firm was not reinstating its 2020 outlook as the environment remains uncertain.
With many parts of the world in lockdown to help control the spread of the coronavirus and large swathes of the labour market out of work, the amount of money sent home by migrant workers this year is expected to fall.
The World Bank last month forecast a 20% decline in global remittances during 2020, before they likely recover to rise more than 5% in 2021.
The 2020 forecast was a “little bit pessimistic” and the 2021 outlook implied a permanent shift downward in the market that was also unlikely based on what Western Union was seeing, Agrawal said.
“Markets like Germany, Switzerland and the Netherlands, they’re now showing trends that are pre-Covid levels. The fact that there’s a lot of stimulus around the world and social safety nets, that is also helping.”