Dividend payout pulls down Genpact's full-year profit 6%

Written by feBureau | New Delhi | Updated: Feb 9 2013, 06:44am hrs
Dividend payments of $502 million made the country's largest business process outsourcing (BPO) firm Genpact post a 6.1% decline in net profit to $178.2 million for the year ended December 31, compared to $184.3 million in 2011.

In the third quarter of 2012, Genpact had paid a special cash dividend of $2.24 per share to its shareholders for an aggregate amount of $502 million and facilitated the sale of approximately 26% of its outstanding shares to Bain Capital Partners from its original sponsors.

The special dividend was funded through a combination of surplus cash on Genpact's balance sheet and a portion of the proceeds of borrowings under a new $925-million senior credit facility. The costs and expenses associated with the above transactions are reflected in Genpact's results for 2012, and adversely impacted net income for the year, the company said in a statement.

However, the full-year revenues were at $1.9 billion, up 18.8% from $1.6 billion in 2011.

For the fourth quarter ended December 31, the BPO's net income was at $53.4 million, down 7.7% compared to $61.1 million in the year-ago period. Revenues stood at $507.7 million, up 14.7% from $442.7 million in the fourth quarter of 2011.

Almost 76.6% of Genpact's revenues for the full year came from business process management services compared to 78.8% last year, with the rest coming from information technology services. The firm generated $310.7 million of cash from operations in 2012.

Despite the drop, the BPO has guided for 2013 revenues in the range of $2.15-2.2 billion, and adjusted operating income margin in a range of 15.8-16.3%.

We remain cautious, as are many of our clients, about the global economy in the near term, even as we see signs of improvement, and we are bullish on the long term. This guidance reflects the revenue contribution and slight margin dilution for the year, said Genpact's chief executive officer and president NV Tyagarajan.

On Thursday, the company acquired US-based Jawood, a provider of business services to the healthcare payer industry and without the anticipated impact of Jawood, Genpact would have expected 2013 adjusted operating income margin to be in a range of 16-16.5%.