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Coronavirus fallout: Accenture cuts revenue growth guidance by 3%

In the light of the uncertainty around coronavirus, the company lowered its revenue growth expectations for FY20 despite growth in revenue in the second quarter over the same period last year

twitter-logo E Kumar Sharma        Last Updated: March 19, 2020  | 20:04 IST
Coronavirus fallout: Accenture cuts revenue growth guidance by 3%
Picture Credit: Accenture YouTube Page

Accenture, One of the first global majors to be releasing its financial results and sharing the business outlook following the unfolding of the coronavirus pandemic, reported revenues of $11.1 billion for the  second quarter, ending February 29, 2020, an increase of 7 per cent in the dollar terms and 8 per cent in local currency over the same period last year. In the light of uncertainty around coronavirus, however, the company lowered its revenue growth expectations for FY20, expecting it to fall in the range of 3-6 per cent compared to 6-8 per cent announced before.

For the fiscal year 2020, it says, "Accenture's business outlook for the full 2020 fiscal year now assumes that the foreign exchange impact on its results in US dollars will be negative 1.5 per cent compared with fiscal 2019. The company previously had assumed a negative 1 per cent foreign-exchange impact. For fiscal 2020, the company now expects revenue growth to be in the range of 3 per cent to 6 per cent in local currency, compared with 6 per cent to 8 per cent previously. Accenture now expects operating margin for the full fiscal year to be in the range of 14.7 per cent to 14.8 per cent, an expansion of 10 to 20 basis points from fiscal 2019. The company previously expected operating margin to expand 10 to 30 basis points." The company follows a September to August financial year.

Analysts see this as an important indicator for leading IT companies in India. They will keenly follow the Accenture commentary on the US market and the early signs in the US market. The things they would want to watch is if the spend by the customers has changed and more importantly, the spending trends in the banking customers. All of it because US is a key market for all and the  coronavirus impact has just begun there.

In a note with the results, it says, "the coronavirus (COVID-19) crisis is rapidly evolving and has created a significant amount of uncertainty. Accenture's third-quarter and full-year 2020 business outlook reflects its assumptions, as of today, regarding the potential effect of the coronavirus pandemic." Accenture says it expects revenues for the third quarter of fiscal 2020 to be in the range of $10.75 billion to $11.15 billion, or negative 2 per cent to positive 2 per cent growth in local currency, reflecting the company's assumption of a negative 1.5 per cent foreign-exchange impact compared with the third quarter of fiscal 2019.

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