Visa Profit Falls on Strong Dollar as Earnings Forecast Trimmed

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Visa Inc., the world’s biggest payments network, said profit fell 3 percent on a strengthening U.S. dollar and revised its full-year forecast for earnings-per-share growth. The stock slid in late trading.

Net income for the fiscal second-quarter ended March 31 dropped 3 percent to $1.55 billion, or 63 cents a share, from $1.6 billion, or 63 cents, a year earlier, adjusted for a stock split, the Foster City, California-based company said Thursday in a statement. The average estimate of 34 analysts surveyed by Bloomberg was 62 cents a share.

Visa, led by Chief Executive Officer Charlie Scharf, 50, is investing in new technology aimed at accelerating mobile and other forms of digital payments and striking deals with merchants as consumers demand more rewards. Spending on the network increased even as consumers spent less at the pump amid lower gas prices in the U.S.

“While the negative impacts from the strengthening of the U.S. dollar and lower gasoline prices continued to exert pressure on revenue growth, our results and volume trends have remained strong,” Scharf said in the statement.

Visa revised its EPS growth forecast for the fiscal year ending Sept. 30 to the “low-end of the mid-teens range,” from “mid-teens” on Jan. 29.

Shares Fall

Visa shares dropped 2 percent to $64.72 at 4:35 p.m. in New York. The stock climbed 0.8 percent this year through the close of regular trading, compared with the 4.7 percent advance of MasterCard Inc., the second-biggest payments network. Visa announced a 4-for-1 stock split in January that took effect March 19.

Revenue in the quarter rose 7.8 percent to $3.41 billion, beating analysts’ estimates. The total was hurt by $676 million in incentives tied to winning new deals with banks, Visa said. Operating expenses rose to $1.13 billion as the company spent more on personnel and technology.

Visa card spending in the U.S. rose 8.3 percent to $747 billion as growth in Canada, Latin America and the Middle East and Africa region slowed. Cross-border volume, a measure of spending abroad, rose 8 percent, the company said.

In February, Costco Wholesale Corp. said Visa will replace American Express Co. as the exclusive card network accepted at its U.S. stores. Visa said last month it’s working with Pizza Hut Inc. to develop technology that allows consumers to make purchases from their cars.

MasterCard reported Wednesday that first-quarter net income rose 17 percent to $1.02 billion, helped by a lower tax rate and a decline in expenses. The company said lower gas prices hurt U.S. purchase volume by 2 percent.


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