Wipro net up 12 percent but IT revenue declines

Bangalore: India's third largest IT bellwether, Wipro, remained profitable in the first quarter this fiscal despite marginal revenue decline in its global IT services business sequentially and annually.
Even for the second quarter, revenue from its flagship IT services business is expected to remain flat in the $1.03-$1.05 billion range, as against the $1.03 billion garnered in the first quarter this fiscal, but still less than the $.1.11 billion earned in the corresponding quarter last fiscal.

According to the company's financial statement for the quarter under review, net profit grew 12 percent year-on-year to Rs.10.16 billion (Rs.1,016 crore), while consolidated revenue increased 5 percent to Rs.62.74 billion (Rs.6,274 crore) as per the Indian accounting standard.

Under the International Financial Reporting System (IFRS), net income grew 13 percent to $212 million, while total revenue jumped 5 percent to $1.31 billion.

"Revenue from our global IT services business at $1.03 billion in the first quarter is a decline of 1.3 percent sequentially and 3.3 percent year-on-year," said Wipro chief financial officer Suresh Senapaty Wednesday.

The projected guidance for the second quarter this fiscal, in the range of $1.03-$1.05 billion, will be a decline of 3.4-1.7 percent on constant currency basis and down 6.7-5.1 percent on reported currency.

The dollar depreciated from Rs.44.78 to Rs.48.23 during the last 12 months.

In constant currency, IT services revenue for the first quarter at $1.01 billion is a decline of three percent sequentially, but a growth of 2.1 percent year-on-year, Senapaty said.

The company's IT products business grew marginally by 2 percent to Rs.7.6 billion (Rs.760 crore) from Rs.7.5 billion (Rs.746 crore) a year ago.

"We are starting to see the first signs of stability in the business as ramp downs start to taper off and volumes start to stabilise. We expect revenues from our IT services to be in the range of $1,035-1,055 million in the second quarter," Wipro chairman Azim Premji said in a statement.

The company's consumer care and lighting revenue grew by 9 percent to Rs.5.46 billion (Rs.546 crore) from Rs.5.13 billion (Rs.513 crore) a year ago.

"We are adapting to the new reality with investments in value creation, go-to-market and driving significant operational productivity," Premji said.

Though the IT services business division added 26 new clients in the first quarter, the number of active clients declined to 830 from 863 sequentially and 928 in the same quarter a year ago.

"Even as the business environment remains challenging, we improved on several operating parameters to deliver margin expansion of 0.6 percent to 22.3 percent in the IT services segment," Senapaty pointed out.

On the hiring front, the company made a net addition of 711 employees. As a result, the total number of engineers for its IT services business division has gone up to 98,521 from 97,810 a quarter ago and 95,675 a year ago