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India’s Infosys forecasts revenue slowdown on uncertain outlook

India’s Infosys forecasts revenue slowdown on uncertain outlook
by AFP Staff Writers
Mumbai (AFP) April 13, 2023

Indian software giant Infosys reported a lower-than-expected profit rise for the March quarter on Thursday and flagged softer revenue guidance on the back of global economic and financial uncertainty.

Infosys, India’s second-largest information technology firm, benefitted from an IT boom that made India the back office to the world for subcontracted work.

The company, like local rival TCS, also gained from the increased use of digital services during the Covid pandemic.

But continued economic uncertainty and financial sector turmoil have made some clients, particularly in Western markets, tighten their belts.

Net profit came in at 61.3 billion rupees ($748 million) for the March quarter, a 7.8 percent rise from the same period last year.

Revenue grew 8.8 percent year-on-year, but fell 3.2 percent quarter-on-quarter in constant currency terms, reflecting the challenging market conditions.

The Bengaluru-headquartered firm forecast revenue growth of four to seven percent in constant currency terms for the year to March 2024, lower than analysts’ expectations.

“During the quarter we saw unplanned project rampdowns in some of our clients and delays in decision-making, which resulted in lower volumes,” Infosys chief executive Salil Parekh said in a media briefing.

“While we saw some signs of stabilisation in March, the environment remains uncertain,” he said.

Infosys earns more than 85 percent of its revenue from North American and European markets.

Employee attrition, an important metric for software companies in India’s competitive IT market, slipped to 20.9 percent compared with 24.3 percent for the December quarter.

But the total number of Infosys employees fell by more than 3,600.

Rival IT giant TCS reported on Wednesday a weaker-than-expected increase in net profit for the first three months of the year, as the fallout from the economic uncertainty and banking turmoil weighed on its US operations.

Shares in Infosys closed nearly 2.8 percent lower in Mumbai trading ahead of the earnings announcement.

Uniqlo operator upgrades forecast on China demand
Tokyo (AFP) April 13, 2023 -
Fast Retailing, the Japanese operator of fast fashion brand Uniqlo, on Thursday upgraded its annual forecasts on strong overseas demand, as Chinese consumers return to stores.

For the six months to February, sales surged 20.4 percent to 1.46 trillion yen, while operating profit climbed 16.4 percent to 220 billion yen, the retailer said.

First-half net profit rose 4.5 percent to 153.4 billion yen.

For the year to August, the company upgraded its net profit forecast to 240 billion yen from an earlier target of 230 billion yen. The new sales target is set at 2.68 trillion yen, up from 2.65 trillion yen.

The company enjoyed robust sales across the world, including Southeast Asia, Australia, North America and Europe as they entered a “genuine growth phase”.

Uniqlo sales outside Japan jumped 27.3 percent while operating profit rose 22.2 percent.

The greater China region, too, was rapidly recovering, with record sales in January and February as consumers emerged from harsh Covid restrictions and returned to streets and shopping malls.

“This far outstripped expectations,” Takeshi Okazaki, chief financial officer, told a news conference.

“Demand for clothes has changed in the wake of the pandemic, and we are seeing rising demand for LifeWear — high quality and basic clothing that one can wear for a long time,” he said.

In Japan, Uniqlo’s winter clothing also enjoyed strong sales, also beyond the company’s expectation, Fast Retailing said.

The yen’s rise, however, increased the cost of imports, weighing down profits, the company added.

Global consumers are becoming increasingly sophisticated and selective, said Tadashi Yanai, chairman, president and chief executive officer.

“For consumers, prices are important but more than that, the value that each product brings is also important,” he said.

Over the next decade, he said he aimed to more than triple the annual sales to 10 trillion yen.

Shares in Fast Retailing rose 2.14 percent to 30,270 yen in Tokyo trading.

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