US economy improving but Europe volatile: Premji

Bangalore, April 19 (IANS) Amid global uncertainty and challenging environment, latest data shows improvement in the US economy while debt-ridden Europe remained volatile, Wipro chairman Azim Premji said Friday.

"The overall macro-economic data in the US seem to be improving, while in Europe, the economic backdrop remains very weak and will remain volatile," Premji told reporters here.

Though sentiments in the European financial markets continued to improve in the early months of 2013, the IT czar said customers, however, expected their vendor partners to own outcomes and deliver value.

"Focus on productivity continues to be high and customers expect IT partners to deliver value for their investments in the technology space," Premji said at a review of Wipro's financial results in fourth quarter (January-March) of last fiscal (2012-13).

Admitting to slowdown in the quarter under review (Q4), particularly in India due to macroeconomic conditions, Premji believes demand in the domestic market would improve in the coming quarters.

"We will also continue to invest in Brazil, China, Europe and the US," he noted.

Expressing confidence that the demerger of the global IT services business from consumer care, lighting and infrastructure businesses would benefit the stakeholders, the chairman asserted the technology-focused company would be able to provide a fresh momentum for growth.

"The demerger has made Wipro a pure play technology firm, which will enhance value for our stakeholders and provide momentum for growth," Premji observed.

In spite of meeting revenue guidance of $1.59 billion for IT services in the fourth quarter (Q4) of last fiscal (FY 2013), the global software major projected a flat growth in first quarter (April-June) of this fiscal (2013-14) in dollar terms.

IT services revenue grew 13 percent year-on-year (YoY) in rupee terms to Rs.8,554 crore (Rs.85.54 billion) in the last quarter of FY 2013, while growth in dollar terms was 3.2 percent YoY and 0.5 percent sequentially to $1.59 billion as projected in mid-January.

With the environment remaining same, revenue from IT services in the first quarter (Q1) of FY 2014 is expected to be in the range of $1,575-1,610 million ($1.6 billion average) in dollar terms.

"The cross currencies have been volatile and impacted our financial performance in the quarter," Wipro chief financial officer Suresh Senapaty said in a statement.

For the full year (FY 2013), IT services revenue, however, grew 19 percent YoY in rupee terms to Rs.33,843 crore (Rs.338.43 billion) while in dollar terms, growth was 5 percent YoY to Rs.6.2 billion.

"Excluding the impact of foreign exchange, we have been able to maintain margins on a sequential basis. We have also shown significant improvements in cash flow generation for the year," Senapaty said.

Unlike its competitor Infosys, Wipro does not give IT revenue guidance for full year.

In a regulatory filing earlier in the day, the company informed the Bombay Stock Exchange (BSE) that it posted net profit of Rs.1,729 crore (Rs.17.3 billion) for quarter under review (Q4), registering 17 percent growth YoY as per the Indian accounting standard.

Similarly, total revenue for the same quarter increased 12 percent YoY to Rs.11,026 crore (Rs.110.3 billion).

Under the International Financial Reporting Standard (IFRS), net income rose 17 percent YoY to $317 million and total income 12 percent YoY to $2.02 billion for the quarter under review.

For the entire fiscal (FY 2013), net profit grew 19 percent YoY to Rs.6,636 crore (Rs.66.4 billion) and total revenue 16 percent YoY to Rs.43,361 crore (Rs.433.6 billion) as per the Indian accounting standard.

Under IFRS, net income for fiscal under review is $1.22 billion and total income $7.95 billion.