Accenture off to a more profitable start to the year

It’s only their first quarter but ‘class act’ Accenture has already raised its earnings guidance for the FY (to August) a tad after reporting operating margins 60bps higher yoy, at 14.5%. By the way, the margin expansion was not about cutting SG&A (in fact SG&A margins increased yoy); it was due to a full 1 point improvement in gross margin (to 32.8%), pointing to sharper delivery and/or better pricing/service mix. See what I mean by ‘class act’?

Revenue growth (at 5% local currencies and 2% headline) was in line with its more muted FY target (5-8% in local currencies – see Accenture sees a tougher market in 2013), reaching a record $7.22bn. However, management is signalling a sequential slowdown in Q2, with headline revenues expected at $6.9-7.15bn.

EMEA remains the laggard, with no growth in the quarter in local currencies and a 6% decline in headline terms. Americas region did best – up 10% local and 8% headline. Growth came from Outsourcing – up 13% local – as Consulting was flat likewise. All vertical operating groups grew bar Communications, Media &Technology – down 1%.

Management intends to put more ‘wellie’ into its growth markets, and I write this from one of them – Brazil – where I will be meeting local management soon.