Wipro announced, on Tuesday, that it earned revenues of $1,518.8 million from its mainstay, software services, which contributed almost four-fifths of overall revenues. Revenues were lower by between 0.34 per cent and 2.27 per cent of the revenue range forecast made by the company three months ago. More significantly, revenues were 1.37 per cent lower on a sequential basis, when compared with the last quarter of the previous fiscal.
The company expects revenues in the second quarter ending September 30 to be in the $1,520-1,550 million range, which implies an expansion of between 0.3 per cent and 2.3 per cent on a sequential basis. Incidentally, the forecast for the second quarter is the third successive time the company has issued an identical forecast, an indicator of the challenges faced by the outsourcing industry.
The steep depreciation of the rupee during the last quarter, however, ensured that in rupee terms the company’s performance appeared more flattering. The company reported consolidated revenues of Rs.10,653 crore during the first quarter ended June 30, 2012, an increase 24 per cent over the same quarter of the previous year. Earnings from software services amounted to Rs.8,314 crore, an increase of 30 per cent. The company made a net profit of Rs.1,580 crore, 18.37 per cent higher than in the same period of last year.
While the share of revenues from the energy and utilities segment has increased by 2.6 percentage points last year, the share of revenues the media and telecom side has dropped by almost two percentage points. In terms of geographic spread, while the contribution from the Americas has fallen by almost 250 basis points, the share of revenues from the Asia-Pacific and emerging markets has increased by about two percentage points last year. The Americas, however, still accounts for half of all revenues from IT services.
T. K. Kurien, CEO and Executive Director of Wipro’s IT business, said the quarter went “largely on expected lines.” He said the company was utilising the services of a “hunting team” of 130 professionals to target new business. Mr. Kurien said the top 10 accounts contributed significantly to overall revenues. He pointed out that the company now has eight “100 million-dollar clients,” compared to four in the last quarter. Revenues from the top five accounts grew by more than 5 per cent on a sequential basis, he noted. While the energy, natural resources and utilities vertical grew more than 34 per cent on a constant currency basis. He identified this, the banking and financial services and health as “key growth areas” for the company. He said the analytics business grew 20 per cent on an annualised basis, yielding the company 21 new clients during the last quarter.
Asked if the company was facing pricing pressure, Mr. Kurien said although offsite pricing declined by one percentage point during the last quarter, he would “not read too much into this decline.” “If we play the value game well, our pricing should remain relatively stable,” he said. “Investment banking is in secular decline and insurance has been flat,” he said referring to the problems in the BFSI space.
Asked to explain the “muted” guidance for the second quarter, he admitted that the upswing of between 80 basis points and 100 basis points that Wipro normally saw from its India business was missing this year.
Pratik Kumar, Executive Vice-President, Human Resources, said the company had implemented salary increases for employees during the first quarter, an average hike of 8 per cent for offshore employees and by 3 per cent for onsite employees.
Revenues from the company’s IT products business fell by 5 per cent to Rs.950 crore. Earnings from consumer care and lighting were Rs.980 crore, an increase of 30 per cent on an annualised basis.
Acquires select businesses of Yardley
PTI reports:
Wipro said in a statement that it had acquired premium personal care brand Yardley’s businesses in the U.K. and other select European nations for an undisclosed amount.
This transaction further expands the geographic reach of the Yardley portfolio already owned by Wipro, it added.
In December 2009, Wipro Consumer Care and Lighting had acquired the Yardley portfolio for Asia, West Asia, North Africa and Australasia from Lornamead.
“Wipro will also acquire the ‘Woods of Windsor’ business, another heritage brand in the U.K., which is well-known for its floral fragrance led portfolio in personal care segment,” the company said without sharing details.
