Accenture Q1 Profit Up 8%, Results Beat View; Lifts 2014 Earnings Outlook

(RTTNews) - Technology outsourcing and consultancy giant Accenture plc (ACN) on Thursday reported an 8 percent increase in profit for the first quarter from last year, aided by higher outsourcing revenues. Both revenue and earnings per share for the quarter beat analysts' expectations.

Looking ahead, the company forecast revenue for the second quarter below Street estimates, but raised its earnings outlook for fiscal 2014. The company maintained its full-year revenue growth outlook.

Pierre Nanterme, chairman and CEO of Accenture, said, "First-quarter results were in line with our expectations, with revenue growth at the top of our guided range as well as strong new bookings, which position us well for the fiscal year. We were pleased with our ability to continue driving profitable growth - including an 8 percent EPS increase - in a global economic environment that remains challenging."

Dublin, Ireland-based Accenture's net income for the first quarter was $751.85 million or $1.15 per share, up from $698.82 million or $1.06 per share in the prior-year quarter.

On average, twenty analysts polled by Thomson Reuters expected the company to report earnings of $1.09 per share for the quarter. Analysts' estimates typically exclude one-time items.

The company noted that the $0.09 increase in earnings per share reflected $0.02 from higher revenue and operating results, $0.03 from a reduction in reorganization liabilities, $0.02 from a lower effective tax rate, and $0.03 from a lower share count. These were partially offset by a decrease of $0.01 from lower non-operating income.

Net revenue for the quarter increased 2 percent to $7.36 billion from $7.22 billion in the same period last year. Analysts had a consensus revenue estimate of $7.25 billion.

Net revenues for the quarter reflect a foreign-exchange impact of negative 1 percent, less than the negative 2 percent previously assumed by the company. In local currency, revenue increased 3 percent.

Outsourcing net revenue for the quarter grew 5 percent in U.S. dollars from last year, while consulting revenue declined 1 percent.

The company's gross margin rose 50 basis points from the year-ago period to 33.3 percent, while operating margin expanded 30 basis points to 14.8 percent.

New bookings for the quarter were $8.7 billion, with consulting bookings of $4.3 billion and outsourcing bookings of $4.4 billion. Outsourcing new bookings accounted for 51 percent of total new bookings in the quarter.

Among operating groups, net revenues from communications, media & technology declined 3 percent, while financial services revenues rose 2 percent and health & public service revenues increased 5 percent. Product revenues grew 6 percent, while resources revenues were flat with last year.

Among regions, revenue from the Americas as well as Europe, Middle East and Africa increased 3 percent each. Meanwhile, Asia Pacific revenues declined 6 percent from the prior-year period.

Looking ahead to the second quarter, Accenture forecast net revenues in a range of $6.95 billion to $7.25 billion, assuming a foreign-exchange impact of negative 1.5 percent. Analysts expect revenues of $7.28 billion for the quarter.

For fiscal 2014, Accenture raised its outlook for earnings to a range of $4.44 to $4.56 per share from the prior range of $4.42 to $4.54 per share.

The revised outlook assumes a foreign-exchange impact of negative 0.5 percent compared to the previous foreign-exchange assumption of negative 1 percent.

However, the company maintained its full-year outlook for net revenue growth of 2 percent to 6 percent in local currency.

Street expects the company to earn $4.47 per share for the year on revenues of $29.54 billion.

In fiscal 2014, Accenture continues to expect to return at least $3.7 billion to its shareholders through dividends and share repurchases, and also continues to project new bookings for the year in a range of $32 billion to $35 billion.

ACN closed Wednesday's trading at $75.62, up $1.62 or 2.19 percent on a volume of 6.33 million shares. In Thursday's pre-market, the stock is adding $2.00 or 2.70 percent to $76.00.