Payments processor Tsys has been forced to revise its full year guidance downwards after posting an 18% fall in net profit for the first quarter and warning of declining card transaction volumes during the recession.
The company posted net income attributable to Tsys of $46.5 million, down 17.8% on earnings of $56.6 million for the same period the previous year. Earnings per share were $0.24, compared to $0.29.
Total revenue for the quarter was down 2.6% on the previous year, at $408.9 million.
The firm says the economic crisis contributed to a 4.3% fall in transaction volumes, while point-of-sale volume increased only one per cent.
Tsys also blamed losses from discontinued operations for contributing to its woes. In December JPMorgan Chase decided to bring Washington Mutual's card processing in-house, terminating the distressed bank's deal with Tsys.
Other factors to affect earnings include currency exchange rates and costs related to international expansion.
The company has moved to trim some fat by offloading Tsys Debt Management, its subsidiary involved in legal collections management and bankruptcy processing. The unit, no longer considered core to the business, is expected to be sold in the second quarter after a letter of intent was signed with a potential buyer.
The vendor has revised its full year guidance and now expects a revenue fall of three per cent to five per cent, compared to a previously forecast gain of up to two per cent. Net income is expected to fall 11% to 13%, compared to a previously forecast drop of a maximum three per cent.
Philip Tomlinson, chairman and CEO, Tsys, says: "We continue to feel the impact of the current economic crisis, as evidenced by our cardholder transaction volumes decreasing 4.3%, and our point-of-sale volume increasing only 1%. This economic driven slowdown in the market, combined with discontinued operations, has led us to adjust our guidance for 2009."