BrazilWipro first IT giant to report annual financial results amid coronavirus crisis
Indian IT services and consulting giant Wipro has released its annual financial results – one the first such consultancies to do so amidst the global coronavirus pandemic.
One early analysis of the coronavirus pandemic on the global consulting industry forecast as much as $30 billion or nearly one fifth could be wiped off books this year – but now the public has one of the first real-world insights with Indian IT services and consulting giant Wipro releasing its fourth quarter and annual financial results for the year ending March 31. The results show a 6 percent year-on-year fall in profit for the last quarter, but the worst may yet be to come.
Altogether, Wipro – which is still on the hunt for a replacement CEO following incumbent chief Abidali Neemuchwala resignation announcement at the end of January – posted annual revenues of $8.1 billion, a 4.2 percent rise. Profits also grew over the year to be up by 8 percent, amounting to $1.3 billion. But now the firm is feeling the margin squeeze, and with the pandemic only impacting the last two to three weeks of March, it’s expected to tighten further in coming months.
“We estimate that the IT services revenues for the quarter ended March 31, 2020 were negatively impacted by Covid-19 by $14-$16 million (~0.8 per cent of revenue),” the firm stated in its report, opting out of providing revenue guidance for the coming quarter and at least until it can gain clarity on both demand and supply side factors. “Due to the uncertainty around the course of the COVID-19pandemic, we do not have visibility into the extent to which it will disrupt our operations.”
Despite the obvious concerns ahead, Wipro’s Chief Financial Officer Jatin Dalal however remained relatively confident; “The quarters ahead seem challenging and require a tremendous response on costs. We also anticipate our working capital to increase, but our strong balance sheet provides us the confidence that we will emerge stronger and better. Yet due to the volatility in the external environment, we have decided not to provide a quarterly guidance on revenues.”
Beyond the report, ongoing CEO Managing Director Neemuchwala was a little more frank, stating in an interview that he expects Wipro’s revenues to decline during the June quarter and that it “will put a huge pressure” on the company’s margins. Citing growing pricing pressure such as IT budget cuts and client requests for discounts or altered payment terms, he also added that should the pandemic extend beyond July then the impact to the business will be significant.
To date, Wipro has experienced a more immediate impact from the pandemic in certain industry verticals, such as manufacturing, aviation and energy. As an overview, for its past financial year, the banking, financial services and insurance sector brought in by far the bulk of its revenues, accounting for approximately a quarter of its business overall, followed by its consumer business unit and then a fairly even spread across health, energy & natural resources, and technology.
“In these unprecedented times, I am extremely proud of how the Wipro team has come together and worked 24/7 to ensure the safety and well-being of each other while continuing to serve our clients,” said Neemuchwala, whose successor is now expected to be announced in June . “We hope that all of us stay safe and strong during these tough times. We are confident that our broad portfolio of services and our ability to execute to our commitments makes us well-positioned to gain market share.”
