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Accenture warns of forex hit amid strong IT services’ demand

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Accenture forecasts revenue below estimates on IT spending cut, higher dollar By Reuters

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© Reuters. FILE PHOTO: Accenture PLC logo is seen on a smartphone in front of displayed same logo in this illustration taken, December 1, 2021. REUTERS/Dado Ruvic/Illustration

(Reuters) -IT services firm Accenture (NYSE:ACN) Plc forecast first-quarter revenue below expectations on Thursday, weighed down by IT spending cuts amid high inflation and impact from a stronger dollar.

Foreign exchange headwinds have intensified since Accenture’s third-quarter results, with the U.S. dollar at a two-decade high against a basket of currencies and up about 16% so far this year amid sharp Fed rate hikes and rising geopolitical tensions.

This has impacted companies with significant overseas operations including Microsoft (NASDAQ:MSFT), Salesforce and IBM (NYSE:IBM).

Analysts worry a protracted economic slowdown could dent robust IT spending with the cracks already showing after Salesforce cut its annual revenue and profit forecast noting “measured” spending from clients.

A strong dollar typically eats into profits of IT companies that convert foreign currencies into dollars.

The company forecast current-quarter revenue between $15.20 billion and $15.75 billion, compared with analysts’ average estimate of $16.07 billion, according to data from Refinitiv.

The forecast reflects the assumption of about 8.5% negative foreign-exchange impact, the company said.

Revenue for the quarter ended Aug.31 was $15.40 billion compared with analysts’ average estimate of $15.39 billion, according to data from Refinitiv.

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