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MasterCard Q2 profits beat estimates

31 July 2013  |  1120 views  |  0 Source: MasterCard

MasterCard Incorporated today announced financial results for the second quarter of 2013. The company reported net income of $848 million, up 19%, and earnings per diluted share of $6.96, up 23%, in each case versus the year-ago period, excluding a special item representing a charge related to the U.S. merchant litigations taken in the second quarter of 2012.

These net income and earnings per diluted share growth figures are reconciled to their comparable GAAP measures in the accompanying financial tables.

Net revenue for the second quarter of 2013 was $2.1 billion, a 15% increase versus the same period in 2012, both on an as-reported basis and adjusted for currency. Net revenue growth was driven by the impact of the following:

  • A 13% increase in gross dollar volume, on a local currency basis, to just over $1 trillion;
  • An increase in cross-border volumes of 17%; and
  • An increase in processed transactions of 11%, to 9.5 billion.

These factors were partially offset by an increase in rebates and incentives.

Worldwide purchase volume during the quarter grew 12% on a local currency basis versus the second quarter of 2012, to $734 billion. As of June 30, 2013, the company's customers had issued 1.9 billion MasterCard and Maestro-branded cards.

"We had a very good second quarter supported by increases in volume and transactions in all regions of the world despite slow economic growth globally," said Ajay Banga, MasterCard president and CEO. "In addition to solid business performance, I am also pleased to report that our financial inclusion initiatives are having a meaningful impact. This year alone, we have launched nine programs in tandem with government entities and other partners in emerging markets which are designed to bring much needed financial access, convenience and security to more than 350 million people globally who previously would not have had access to financial products."

Total operating expenses increased 5%, to $868 million, during the second quarter of 2013 compared to the same period in 2012, excluding the special item. The increase was primarily driven by higher personnel expenses in support of strategic initiatives. Including the special item from 2012, total operating expenses increased 2% from the year-ago period.

Operating income for the second quarter of 2013 increased 24% over the year-ago period, excluding the special item, and the company delivered an operating margin of 58.6%.

MasterCard's effective tax rate was 31.2% in the second quarter of 2013, versus a rate of 28.0% in the comparable period in 2012, including the special item. The increase was primarily due to higher discrete benefits in 2012.

During the second quarter of 2013, MasterCard repurchased approximately 1.1 million shares of Class A common stock at a cost of approximately $581 million. Quarter-to-date through July 25, the company repurchased an additional 296,000 shares at a cost of approximately $174 million, with $1.1 billion remaining under the current repurchase program authorization.

Year-to-Date 2013 Results

For the six months ended June 30, 2013, MasterCard reported net income of $1.6 billion, up 16%, excluding the special item and up 17%, including the special item from the second quarter of 2012. Earnings per diluted share was $13.19, up 20%, excluding the special item and up 21%, including the special item from the second quarter of 2012.

Net revenue for the six months ended June 30, 2013 was $4.0 billion, an increase of 12% versus the same period in 2012. Gross dollar volume growth of 13%, cross-border volume growth of 17% and transaction processing growth of 12% contributed to the net revenue growth in the year-to-date period. These factors were partially offset by an increase in rebates and incentives.

Excluding the special item, total operating expenses increased 5%, to $1.7 billion, for the six months ended June 30, 2013, primarily due to higher personnel costs related to strategic initiatives. Including the special item, total operating expenses increased 4%.

Excluding the special item, operating income increased 17% for the first half of 2013 versus the first half of 2012, delivering an operating margin of 58.4%.

MasterCard's effective tax rate was 30.9% in the six months ended June 30, 2013, versus a rate of 30.0%, including and excluding the special item in the comparable period in 2012. The increase was primarily due to higher discrete benefits in 2012.

The full report can be read here. 

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