Accenture expects better profitability amid lower costs
Reuters
Published Sep 24, 2014 02:33PM ET
Accenture expects better profitability amid lower costs
(Reuters) - Consulting and outsourcing company Accenture Plc (N:ACN) said it expects profitability to improve this fiscal year as it focuses on trimming operating costs.
Accenture, whose outsourcing business competes with India's Infosys Ltd (NS:INFY) and Tata Consultancy Services (NS:TCS), has faced pricing pressure amid sluggish business spending and stiff competition in the last few quarters.
The company said it expects operating margin of 14.4-14.6 percent for the year ending August 2015 — 10-30 basis points higher than the year ended Aug. 31.
"(Contract profitability) has been sequentially better in quarter three as compared to quarter two, and then again in quarter four as compared to quarter three," Chief Financial officer David Rowland said on an earnings call with analysts.
"We have seen good progression in payroll efficiency, but yet more work to do," Rowland added.
Accenture forecast full-year profit of $4.74-$4.88 per share, including a 2 percent hit related to currency-rate fluctuations.
Analysts on average were expecting a profit of $4.91 per share, according to Thomson Reuters I/B/E/S.
The company, whose consulting business competes with Hewlett-Packard Co (N:HPQ) and IBM Corp (N:IBM), also forecast first-quarter revenue of $7.55 billion-$7.80 billion.
Analysts were expecting $7.80 billion.
Accenture said it expects $34 billion-$36 billion of new contracts for the full year, compared with $35.88 billion in the previous year.
Net income rose to $760.2 million, or $1.08 per share, in the fourth quarter from $727.3 million, or $1.01 per share, a year earlier.
Net revenue increased to $7.78 billion from $7.09 billion, helped by new contracts in both businesses.
Analysts had expected a profit of $1.10 per share on revenue of $7.6 billion.
Accenture's shares were hardly changed at $79.59 on the New York Stock Exchange in afternoon trading on Wednesday.
(Reporting By Lehar Maan in Bangalore; Editing by Joyjeet Das)
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