Wipro profit up better than expected 24 percent

Associated Press Modified: November 2, 2012 at 2:16 am •  Published: November 2, 2012
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MUMBAI, India (AP) — Wipro reported September quarter profit of 16.1 billion rupees ($300.6 million) Friday, an increase of 24 percent in rupee terms, as customers in Europe turned to outsourcing to cut costs and growth begins to return to the U.S.

Profit was better than expected, though revenue came in slightly below expectations, at 106.6 billion rupees ($2.0 billion).

Analysts polled by FactSet forecast profit of 15.5 billion rupees ($289.2 million) on sales of 108.5 billion rupees ($2.0 billion).

The company said revenue in its core outsourcing business was $1.54 billion, up 4.6 percent in dollar terms from a year ago.

India's third largest outsourcer said revenue in its core information technology business would tick up slightly, to between $1.56 billion and $1.59 billion in the December quarter.

T.K. Kurien, chief executive of Wipro's IT business, said he was "cautiously optimistic" about future growth, as clients in Europe turn to outsourcers to save money and growth begins to return to the U.S.

He said deal closures, which had been frozen by global economic uncertainties, improved toward the end of the second quarter, a trend he hopes will improve after the U.S. presidential election.

"I wouldn't say I see a blow-out future ahead of us but I see more optimism than I did a quarter ago," Kurien said, speaking on CNBC-TV18. "Pipeline in both these geographies is looking pretty strong. What we are waiting for is closure."

Revenues from the Americas rose 4.0 percent from a year ago, while in Europe they grew 2.7 percent, against a 9.3 percent decrease in Wipro's Japanese business and a 3.1 percent slide in India and the Middle East. Wipro's small offerings elsewhere in the Asia Pacific and other emerging markets grew by 25.1 percent from a year ago.

Kurien said pricing increases made up for weak volume growth. Wipro raised prices by 1.9 percent in work done at client sites and 1.5 percent for offshore work from the prior quarter, a trend Kurien said he does not expect to reverse.