Accenture cut full-year outlook as consulting slows further
Outsourcing and consulting services provider Accenture Plc cut its full-year outlook, citing a pullback in spending by its consulting business clients, after reporting third-quarter revenue below analysts' estimates.
June 28, 2013 / 13:46 IST
Outsourcing and consulting services provider Accenture Plc cut its full-year outlook, citing a pullback in spending by its consulting business clients, after reporting third-quarter revenue below analysts' estimates.
Also read: Tata Group to bid for road projectsShares of Accenture, whose clients include London's Heathrow Airport, Nokia Oyj, Baker Hughes Inc and AstraZeneca UK, were down 7 percent at USD 74.60 in extended trading on Thursday.Clients were slowing the pace and level of spending on existing contracts, said Accenture, whose rivals include Cognizant Technology Solutions Corp and Infosys Ltd.The company expects outsourcing revenue to moderate, and consulting revenue to decline modestly or grow slightly in the current quarter, Chief Financial Officer David Roland said on a conference call with analysts.Accenture now expects adjusted earnings of USD 4.18 to USD 4.22 per share on revenue growth of 3 to 4 percent in local currency for the year ending August 31.The company in March had forecast adjusted annual earnings of USD 4.24 to USD 4.32 per share on a revenue growth rate below the midpoint of the 5-8 percent range it previously expected in local currency.The outlook assumed a negative currency impact of 1.7 percent, compared with a negative impact of 1 percent expected earlier.While there has been moderate improvement in discretionary spend in 2013, there was still softness in the consulting segment, particularly in Europe, Barclays analyst Darrin Peller wrote in a note.Accenture's consulting net revenue dropped 2 percent to USD 3.9 billion in the three months ended May 31. Revenue from the business, which Accenture expected to return to growth, fell for the fourth straight quarter.Consulting bookings were almost USD 400 million lower than the company expected. Smaller contracts, which convert to revenue faster, declined."It (consulting) definitely didn't improve the way we expected and we see more softness in that part of the business in consulting smaller deals," Accenture Chief Executive Pierre Nanterme said on the call.Outsourcing net revenue rose 4 percent to USD 3.3 billion in the quarter.Accenture's results could have been worse without the strength in outsourcing, Edward Jones technology analyst Josh Olson told Reuters.Net revenue rose 0.6 percent to USD 7.2 billion.Net income rose to USD 874.1 million, or USD 1.21 per share, in the third quarter, from USD 762.8 million, or USD 1.03 per share, a year earlier.Excluding items, the company earned USD 1.14 per share.Analysts on average had expected earnings of USD 1.13 per share on revenue of USD 7.42 billion, according to Thomson Reuters I/B/E/S. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
