Wipro Q4 net falls over 20% to Rs1,800 cr hit by client insolvency
25 Apr 2018
Wipro, India's third-largest IT firm, has posted a consolidated net profit of Rs1,800 crore for the fourth quarter of FY18, a more than 20 per cent decline from Rs2,267 crore posted during the same quarter a year ago and down 6.7 sequentially from Rs1,930.1 crore.
The Bengaluru-based company said the decline in profit was largely due to provisions relating to the insolvency of two customers.
Gross revenue for the January-March 2018 quarter stood at Rs13,768.6 crore against Rs13,987.5 crore recorded during the year-ago period.
Wipro’s revenue from operations grew 0.7 per cent for the quarter to Rs13,669 crore. Rupee revenue from IT services was Rs13,412 crore, up 1.3 per cent sequentially from Rs13,235 cr in the last quarter.
IT services revenue in dollar terms stood at $2.06 billion, up 2.4 per cent sequentially and 5.5 per cent year-on-year. Constant currency revenue grew 1.1 per cent sequentially.
IT services EBIT margin was 14.4 per cent, a 40 basis points contraction quarter-on-quarter. Excluding the impact of insolvency of a customer and the impairment loss in one of its acquisitions, IT services margin for the quarter was 16.0 per cent.
“Our investments in digital and our efforts in client mining are paying off well. Our strong order bookings in the last two quarters provide us the right foundation to grow as we progress through the year," said CEO Abidali Z. Neemuchwala.
Wipro's board at its meeting on 19 January 2018 had declared an interim dividend of Rs1 per equity share for the financial year 2017–18. The board recommends adoption of the interim dividend as the final dividend for the financial year 2017–18. Thus, the total dividend for the financial year 2017–18 remains Rs1 per equity share.
The company also completed a buyback of Rs11,000 crore in December 2017.
“We continue to make progress in our client mining, with number of clients contributing revenues over $75 million increasing from 17 to 20 during the quarter. Our investments in Wipro HOLMESTM and our automation suite are resulting in consistent productivity improvements. We generated robust operating cash flows of Rs8,400 crore at 105 per cent of our net income in FY18,” Jatin Dalal, chief financial officer at Wipro, said.
For the full year, Wipro's net profit fell 5.7 per cent on YoY to Rs8,010 crore ($1.2 billion), while gross revenue fell 1 per cent YoY to Rs54,490 crore ($8.4 billion). IT services segment revenue stood at $8,060.2 million, an increase of 4.6 per cent YoY, while non-GAAP constant currency IT services segment revenue grew 2.9 per cent YoY.
IT services segment revenue in rupee terms remained flat at Rs52,840 crore ($8.1 billion1). IT services margin was 15.8 per cent, it added.
Wipro expects revenue from IT services business to be in the range of $2.02 billion to $2.07 billion for the quarter ending 30 June 2018. The company had announced the divestment of its hosted data center services business to Ensono for a consideration of $405 million. It expects the transaction to be complete during the quarter ending 30 June 2018.
"For the outlook, we have not considered the impact of the divestment on the revenue for the quarter ending 30 June 2018. We will revise the outlook for the quarter based on the actual date of completion of the divestment," it added.