Genpact’s Q4 net profit drops 12.6%

For the December quarter, net profit dropped to $53.4 million while revenue rose 14.7% to $507.7 million
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First Published: Fri, Feb 08 2013. 04 26 PM IST
A file photo of N.V. Tyagarajan. Photo: Aniruddha Chowdhary/Mint
A file photo of N.V. Tyagarajan. Photo: Aniruddha Chowdhary/Mint
Updated: Sat, Feb 09 2013. 12 55 AM IST
New Delhi: Genpact Ltd, India’s largest business process outsourcing firm, reported a 12.6% decline in net profit during the December quarter and said it expects revenue to grow slower this year, a reflection of global economic uncertainty.
For the three months ended 31 December, the company’s fourth quarter, net profit dropped to $53.4 million from $61.1 million in the year earlier, while revenue rose 14.7% to $507.7 million.
“We remain cautious, as are many of our clients, about the global economy in the near term, even as we see signs of improvement, and we are bullish on the long term,” N.V. Tyagarajan, Genpact president and chief executive, said in a statement.
Genpact estimates revenue will rise 13.2-15.8% to $2.15-2.20 billion in 2013 from $1.9 billion in 2012, when it had risen 18.8% from $1.6 billion in 2011. Net profit for the year dropped to $178.2 million from $184.3 million while the net income margin narrowed to 9.4% from 11.5% in 2011.
The company expects full-year adjusted operating income margin at 15.8-16.3%, a dilution of about 20 basis points, owing to the recently announced acquisition of healthcare software service provider Jawood, Tyagarajan said. One basis point is one-hundredth of a percentage point.
Profit had dropped 47.5% to $25.2 million and the net margin had narrowed to 5.1% in the September quarter from 11.2% the year earlier. At the time, the company attributed this to the impact of a foreign exchange remeasurement loss as well as expenses related to a special cash dividend.
Those factors had an impact on the full-year numbers, the company said on Friday.
“In the third quarter of 2012, Genpact paid a special cash dividend of $2.24 per share, for an aggregate amount of approximately $502 million, to holders of Genpact common shares and facilitated the sale of approximately 26% of its outstanding shares to Bain Capital Partners from its original sponsors,” Genpact said.
“The special dividend was funded through a combination of surplus cash on Genpact’s balance sheet and a portion of the proceeds of borrowings under a new $925 million senior credit facility. The costs and expenses associated with the above transactions are reflected in Genpact’s results for 2012, and adversely affected net income for the year,” the company said.
In early August last year, Bain Capital Llc had bought a combined 30% stake in Genpact for $1 billion from General Atlantic Llc and Oak Hill Capital Partners.
The company’s diluted earnings per common share was $0.23 for the three months ended December compared with $0.27 in year earlier.
“Our results in the fourth quarter and full year 2012 demonstrated strong client demand and profitable growth,” Tyagarajan said.
Genpact generated $310.7 million of cash from operations in 2012 and $101.2 million in the fourth quarter of 2012. It had around $477.5 million in cash and cash equivalents and short-term deposits as of 31 December 2012, and 60,200 employees worldwide.
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First Published: Fri, Feb 08 2013. 04 26 PM IST
More Topics: Genpact | results | net profit | N.V. Tyagarajan |