December 18, 2014 / 12:33 PM / 4 years ago

Accenture raises full-year revenue forecast after strong first-quarter

(Reuters) - Consulting and outsourcing company Accenture Plc (ACN.N) raised its revenue forecast for fiscal 2015 after contract wins helped the company post better-than-expected first-quarter earnings and revenue.

Visitors look at devices at Accenture stand at the Mobile World Congress in Barcelona, February 26, 2013. REUTERS/Albert Gea/Files

The company said it expects revenue growth of 5-8 percent on a local currency basis for the year ending August, up from the 4-7 percent growth it had estimated earlier.

Accenture’s shares rose as much as 6 percent to a fresh life-high of $90.99 on Thursday.

“I think what you are seeing there is that they had some very big deals last year and those big deals are waterfalling to revenue this year,” Susquehanna analyst James Friedman said.

Accenture, however, cut its earnings forecast, citing a larger-than-expected impact from a strong dollar.

The company, which gets about 56 percent of its revenue from outside North America, said it expects earnings $4.66-$4.80 per share for the period, down from its previous forecast of $4.74-$4.88.

Accenture’s gross margins slipped in the first quarter, which the company said was due to variable costs such as hiring and training.

“Despite continued pressure in gross margins ... operating margins expanded 20 basis points on solid management of non-payroll costs,” Edward Jones analyst Josh Olson said.

The company’s quarterly results were mainly driven by double-digit percentage growth in its communications, media and technology group and health and public services operation.

Revenue in the outsourcing business rose 11.2 percent to $3.80 billion in U.S. dollar terms, accounting for 48 percent of the company’s total net revenue.

Accenture’s outsourcing business, which competes with India’s Infosys Ltd (INFY.NS) and Tata Consultancy Services (TCS.NS), has faced pricing pressure amid sluggish business spending and stiff competition in the last few quarters.

Revenue in Accenture’s consulting business, which competes with Hewlett-Packard Co (HPQ.N) and IBM Corp (IBM.N), rose 4 percent to $4.09 billion.

The business, in which revenue fell in six of the last 10 quarters, started picking up pace in the third-quarter after struggling for a year with low contract profitability, declining discretionary spending and stiff competition.

Accenture’s net income including non-controlling interests rose to $882.2 million, or $1.29 per diluted share, in the first quarter ended Nov. 30 from $800.9 million, or $1.15 per share, a year earlier.

Net revenue rose 7.3 percent to $7.90 billion.

Analysts had expected a profit of $1.20 per share on revenue of $7.69 billion, according to Thomson Reuters data.

Reporting By Lehar Maan and Abhirup Roy in Bengaluru; Editing by Saumyadeb Chakrabarty

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