Profits Climb at Accenture - TheStreet

Profits Climb at Accenture

The company also expects fourth-quarter revenue to grow 5% to 10%.
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Consulting company


(ACN) - Get Report

reported a 15% increase in third-quarter earnings Tuesday as expense controls, a tax benefit and the weak dollar boosted profits.

In the quarter ended May 31, Accenture earned $132.1 million, or 28 cents a share, compared with $114.5 million, or 27 cents a share, in the third quarter last year. The company said it received a tax benefit of 2 cents a share during the quarter from a change in its tax rate.

Operating income was $404 million, down from last year's $435 million. The decline resulted from lower gross margins, due in part to a $50 million increase in severance costs.

Core earnings, which reflect adjustments to add back minority interests and exclude nonoperating items, were $247 million, or 25 cents a share, compared with $208 million, or 20 cents a share, last year.

Revenue before reimbursements was $3.04 billion, which was a 2% increase in U.S. dollars, but a 5% decrease in local currencies compared with last year's sales. Outsourcing revenue, which is now 31% of the total, was $944 million, up 35% in U.S. dollars and 28% in local currency over last year.

Gross margins were 36.3% of revenue, compared with 41.2% of revenue in last year's third quarter. The company cited its shift to outsourcing for the decline. Accenture said new bookings during the quarter totaled $5.2 billion, with $2.2 billion consisting of consulting work.

In the fourth quarter ending Aug. 31, the company expects to earn 21 cents to 25 cents a share on a revenue increase of 5% to 10%. Analysts currently expect 23 cents a share on revenue of $2.81 billion.

Shares of Accenture closed at $18.85 Monday on the

New York Stock Exchange