Genpact Q4 net declines 8.6 per cent to $48.8 million

BPO major Genpact on Friday reported a 8.6 per cent decline in its net profit at $48.8 million for the fourth quarter that ended in December 2013.

The company had reported a net profit of $53.4 million for the December quarter of 2012, Genpact said in a statement.

Revenues for the quarter under review stood at $558.5 million, up 10 per cent from $507.7 million in the corresponding period of the previous financial year.

The company follows January-December fiscal year.

The NYSE-listed company's net profit for full-year in 2013 was up 28.9 per cent to $229.7 million, while revenues grew 12.1 per cent year-on-year to $2.13 billion.

Genpact expects headwinds to continue during the current fiscal year and has projected its revenue in the range of $2.22 to 2.26 billion.

"The fundamentals of our business and our market opportunity have not changed and we continue to believe there is a long runway for growth where our competitive advantages are clear and compelling," Tyagarajan said.

To capture the right growth opportunities, Genpact is accelerating its investments in client-facing teams and solutions in specific verticals and service lines, he added.

"In the near-term, we expect the revenue headwinds we faced in 2013 to continue and, as a result, our revenue guidance for 2014 is $2.22 to $2.26 billion," he said.

"We faced a number of revenue headwinds during the year, including reduction in our mortgage originations business related to US mortgage refinancing volumes, softness in our GE business and the adverse impact of foreign exchange, as well as extended deal cycle times reflecting the increase in the value and proportion of large deals in our pipeline," Genpact president and chief executive N V Tyagarajan said.

Although conversion to revenue in large, transformative deals tends to be longer, these engagements are where Genpact wants to be and is a positive trend for the medium-term, he added.

"Despite these challenges, we continued to deliver clear, measurable business outcomes for clients, differentiate our approach by building capabilities and domain expertise, and strengthen our relationships with existing clients, as well as add many new clients," Mr Tyagarajan said.

Revenues from Global Clients increased 16.4 per cent for the full year 2013 and 13.3 per cent in the fourth quarter, led by growth in the banking and financial services, insurance, high-tech, consumer packaged goods, retail and life sciences verticals.

Revenues from Global Clients represented approximately 77.5 per cent of Genpact's total revenues in 2013, with the remaining 22.5 per cent of revenues coming from GE.

GE revenues decreased 0.6 per cent for the full year 2013 and 0.1 per cent in the fourth quarter, adjusted for dispositions by GE of businesses that Genpact continues to serve.

About 75.4 per cent of Genpact's revenues for the full year 2013 and 75.3 per cent for the fourth quarter came from business process management (BPM) services, while the remaining was from IT services.

Genpact generated $311.6 million of cash from operations in 2013, up from $310.7 million of cash a year earlier, which included approximately $45 million from an upfront client payment. It had about $571.3 million in cash and cash equivalents as of December 31, 2013.

As of December 31, 2013, Genpact had approximately 63,600 employees worldwide, as against around 60,200 at the end of 2012.

The attrition rate for the entire year, measured from day one, was 25 per cent, unchanged from 2012.