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Accenture underperforms estimates for IT spending savings – Strategy

IT services company Accenture expects lower-than-expected first-quarter sales, weighed down by cutbacks in IT spending amid high inflation and a strong dollar.

Foreign exchange headwinds have picked up since Accenture’s third-quarter earnings report, pushing the US dollar to a 20-year high against a basket of currencies, up about 16% so far this year. [US] Fed Rate Hikes and Growing Geopolitical Tensions.

This is affecting companies with significant international operations, such as Microsoft, Salesforce and IBM.

Accenture, which offers diversified products across segments such as cloud and security, reported new orders of US$18.4 billion (A$27.8 billion) in the fourth quarter.

However, the company expects its financial year 2023 results to be hit nearly 6% year-on-year by a stronger dollar, which typically weighs on the profits of IT companies that convert foreign currencies into dollars.

In a silver lining, analysts say the majority of digital transformation projects remain non-discretionary, shielding companies such as Accenture from the severe consequences of corporate spending cuts.

Accenture, which generates more than half of its revenue from outside the United States, expects annual earnings per share to be $11.09 to $11.41, according to Refinitiv data, which is expected to be $11.96.

The company forecasts revenue of US$15.2 billion to US$15.75 billion for the quarter, accounting for a negative foreign exchange impact of 8.5%. Analysts had estimated it at US$16.07 billion.

Earnings for the quarter ended August 31 were broadly in line with estimates of US$15.4 billion. Earnings of US$2.60 per share exceeded expectations of his US$2.57.

The company also said its board has approved a further US$3 billion share buyback.

Accenture underperforms estimates for IT spending savings – Strategy

Source link Accenture underperforms estimates for IT spending savings – Strategy

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