Accenture Plc reported economic downturn in company
2022.12.16 11:30
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Accenture Plc reported economic downturn in company
Budrigannews.com – On Friday, Accenture Plc revealed weakness in its consulting division and predicted lower-than-expected quarterly sales, indicating pressure from businesses delaying business improvement projects in the face of economic uncertainty.
Spending on IT and transformation projects is returning to normal following a boom during the pandemic as businesses observe slower growth. Arvind Ramnani, lead analyst at Piper Sandler, wrote in a recent note to investors that businesses are prioritizing projects with shorter durations and higher returns on investments.
In a post-earnings conference call, Chief Executive Officer Julie Sweet stated that customers “are more and more focused on cost resilience, and many of them are having to make really hard choices.”
According to Sweet, the strategy and consulting business will see a slight drop in sales in the second quarter. He added that the weakness is coming from retail and consumer goods industries.
Accenture anticipates revenue of $15.20 billion to $15.75 billion for the current quarter. Refinitiv says that the midpoint of the guidance is lower than analysts’ estimate of $15.61 billion.
The industry is concerned about Accenture’s lower forecast, which is regarded as a benchmark for IT services and consulting.
Cognizant Technology Solutions (NASDAQ:) last month citing higher costs and contract pullback, the company lowered its revenue and adjusted earnings guidance for the full year ending December 31.
According to Julie Bhusal Sharma, an equity analyst at Morningstar, there will be less demand for new consulting projects in fiscal 2023.
In addition, Sharma stated, “We think generally, caution will persist, leading to delays in decision making,” and “that spending will be the softest in smaller deals over larger deals.”
Accenture’s first-quarter earnings and revenue that were higher than anticipated were overshadowed by the warning.
More Canadian Stock Market Falls amid Recession
In the quarter that ended on November 30, sales increased by 5% to $15.7 billion, which was higher than the average estimate of $15.58 billion made by analysts. However, a stronger dollar had a negative impact on sales that was higher than expected by 9.5%.
The quarter’s diluted earnings were $3.08 per share, exceeding the $2.91 analyst estimate.
