Accenture shares slump as it misses analyst estimates
Shares in global consulting giant Accenture slumped yesterday after it cut its full-year outlook and reported third-quarter revenue that missed analyst estimates. Its shares went into freefall in New York.
The Dublin-headquartered group also continues to warn that that having its tax base here could make it the target of “criticism and negative publicity”.
The group has cautioned investors of the potential implications ever since it moved its tax base to Ireland from Bermuda in 2009. It moved to Ireland following criticism of firms incorporated in Bermuda, which was considered a tax haven.
But companies including Apple and Google have come under close scrutiny by US politicians who declared that Ireland was also tax haven.
The allegations saw the Government fight a rearguard action to defend Ireland's tax regime and corporation tax rate. At the time of its move to Ireland, Accenture said it didn't expect to benefit from any material change in its financial results or tax treatment. It said Ireland offered a "sophisticated, well-developed corporate, legal and regulatory environment".
In its latest set of quarterly accounts, Accenture notes that its effective tax rate was 23.8pc in the three months ended in May.
"The effective tax rate was impacted by the re-organisation benefit, which increased income before income taxes without any increase in income tax expense," it noted.
"Excluding this benefit, the effective tax rate for the third quarter of fiscal 2013 was 24.8pc compared with 28.5pc for the third quarter last year."
The company notched up a $50m (€38.3m) re-organisation benefit in the quarter.
Accenture said it expected its annual effective tax rate to be between 18.5pc and 19.5pc. That includes an estimated full-year reduction of approximately seven percentage points from benefits related to final determinations of prior-year US federal tax liabilities in the second quarter, and the reductions in re-organisation liabilities, according to the firm.
"Excluding these benefits, Accenture now expects its annual effective tax rate to be in the range of 25.5pc to 26.5pc," it added.
Shares in Accenture, considered a bellwether for the IT sector, slumped over 13pc yesterday after its $7.2bn third-quarter revenue missed the $7.43bn predicted by analysts. It also said fourth-quarter revenue would be between $6.7bn and $7bn, compared to the $7.36bn expected by analysts.
"We've had some areas of our business where the activity is much different than we would have expected, some of which would have been tough to predict," said David Rowland, Accenture's new chief financial officer.
"We are not in the business of missing guidance and we don't find that to be acceptable, so that would not be our expectation going forward."