NEW YORK (AP) — Payments processor MasterCard Inc. said that its profit and revenue rose in the first quarter as card users spent more. Profit beat the forecasts of Wall Street analysts, though revenue missed slightly and the company's stock fell in midday trading.
Company executives sketched a picture of a mixed global economy and a U.S. consumer suffering from the payroll tax hike that took effect in January. The results showed stronger growth outside the U.S. than at home, with purchases in Asia, the Middle East and Africa growing the most.
The Purchase, N.Y., company does business all over the world, and its results are a window into how people are spending — and how they're feeling about the economy — on all different income levels.
In the U.S., consumer spending was relatively strong in January after a weak holiday season, MasterCard executives said. But it slowed in February and March, and MasterCard leaders guessed that was because consumers were registering the effect of the higher payroll taxes, a result of negotiations over the federal budget in Washington.
The U.S. economy in the first quarter "was definitely very choppy," MasterCard Chief Financial Officer Martina Hund-Mejean said in an interview with The Associated Press. She expects the current quarter to be muted as well.
"We have still a very high unemployment rate, housing is just starting to get better, all the discussion in Washington about the fiscal debt — that makes people feel uncomfortable," Hund-Mejean said. "So there are a number of things that are not resolved."
CEO Ajay Banga said he was pleased that the first-quarter results met the company's own expectations, despite the "challenging economic conditions." He said U.S. consumers had also been hurt in the first quarter by high prices for food and gas, as well as winter storms in March.
Sterne Agee analyst Greg Smith described the quarter as "a slow start," with some measures of revenue lighter than he expected. Overall, though, results were in line with expectations, Smith said in a note to clients. A lower-than-expected tax rate helped, and he noted that the year-ago quarter was particular strong, meaning the company had a tough comparison to meet.