Accenture 4Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“For the full year…We delivered new bookings of $33.3 billion…We generated revenues of $28.6 billion, a 4% increase in local currency…After adjusting to exclude tax and reorganization benefits in the second and third quarters, earnings per share for the year were $4.21, a 10% increase…operating margin of 14.2%, a 30 basis point expansion”

“All 3 components of our consulting bookings, management consulting, technology consulting and systems integration, were all at the low end of our book-to-bill range and very similar to our Q3 bookings level. And at the same time, we did see consulting bookings convert to revenue slightly faster than we expected.”

“we had bookings over $100 million at 11 clients, giving us a record 44 clients with bookings at this level”

“From a geographic standpoint, needless to say, we are living in an interesting world. A year ago, the big questions were around Europe and the sovereign debt issue. It now seems that Europe is stabilizing and even showing some early signs of improvement. And today, the question is around the emerging markets, where we’re seeing more volatility.”

“For the past 4 to 5 quarters, it’s clear that our addressable market has been in a cycle of lower growth, and this has certainly impacted our growth. As we look forward, we think it’s likely that our overall market conditions won’t change much in the near term. ”

“Overall, my assessment on the situation is Europe is stable with hopefully, early sign of improvement. But you know the overall economic condition, probably all Europe been moving from a slight recession to a slight growth, but more or less — being more or less the same plus”

“When you look at Japan, indeed, we mentioned last quarter that we were challenged with the EHT activity in Japan. And again, it’s more or less the same. We’re working hard in Japan. probably Japan is not totally out of the woods. We are still challenged, especially in the vertical you’re mentioning.”

“BPO is doing very well, and we are doing very well in BPO. So I’m pleased to have the opportunity to acknowledge our people and our leader driving the BPO business. I mean, why — I mean, first, there is a natural demand on BPO for the reason [ph] of cost management, productivity and efficiency and of course, business process outsourcing is a good response.”

“But what’s different with the BPO at Accenture? We invested a lot in BPO, first, and invested to create innovative services with a lot of analytics inside, what we’re calling BPO Generation 4 or 5. But forget about the generation. Just to mention that we are investing in bringing more capabilities and more innovation out of our BPO. So there is a strong demand. We have differentiated solutions and services.”

“what we’re in right now is no different than cycles that we’ve been in — many other cycles, where when you hit a period of low growth in our addressable market, even though we take share, the math is such that even taking share, our growth is going to be lower.”

“if you look in the prior ’08, the global economic growth has been in the range of 5%-ish. If you look at these last couple of years, the global economic growth has been in the range of 2%-ish. And at the end of the day, the addressable market is somewhat correlated to the global economic growth. I mean, that’s a kind of natural correlation at some point in time. So the reality is that today, we’re in a world growing at 2%. And as mentioned by David, the addressable market, the way we define, has been growing in that range. So we are executing against our commitment, which is anyway to grow more than the market and then deliver value to our clients and shareholders. But the world has changed.”

“ERPs are important, and they are important for all the industry. It’s the backbone of a lot of things our clients are doing in IT to build system and then in driving maintenance and so forth. But again, we are a very highly diversified company. We are doing ERP, and we are doing a lot of other things in our portfolio of business.”

“frankly, the one with the highest volatility and probably caught us by surprise to be honest will be Brazil. We had a very strong growth over many years. Brazil was, as you all know, a place where many of our clients have been investing for quite a long time. And what happened in Brazil probably caught our clients and ourselves a little bit by surprise with what’s happened now.”

“frankly, I’m very pleased with one country which is very important for Accenture but going to be extremely important for the future is China. I mean, China is going to be the second largest economy in the world. We all know how strong is China. And frankly, double-digit growth in China these last quarters, not to mention these last couple of years, I’m extremely pleased with what’s happening.”

“clearly in the mature markets today, you have a bias towards cost productivity, still efficiency for all sorts of reason we know, low economic growth. So a company to be more competitive, you need to be extremely mindful regarding your costs. And so you have this consequence around outsourcing and BPO being more in demand at consulting in that cycle. If you move to the emerging markets, they’re still in an environment where you need to build capabilities. And it’s not a surprise that we see some ERP work or build work or consulting work, for instance, in countries such as China, where you will see probably more consulting than outsourcing in countries such as China. So it’s probably fair indeed, David, to call that in emerging markets, it’s going to be more skewed towards consulting versus outsourcing and in mature markets, it’s going to be the other way around.”