Firstsource Solutions (FSL) Q4 09/10 earnings summary

Executive summary

• FY10 revenue from operations rose 13% to Rs. 19,708 million; operating EBIT margin expanded 190 bps to 9.8% excluding discontinued-operation expenses. 

• Organic growth and vertical restructuring supported expansion: 8 of the top 10 clients grew, and new wins included UK telecom and US card issuers. 

Financial highlights

• Consolidated total income was Rs. 19,918 million, up 12%; operating EBITDA rose 23% to Rs. 2,721 million and operating EBIT increased 48% to Rs. 1,849 million. 

• Net profit after tax reached Rs. 1,361 million versus Rs. 307 million; basic EPS was Rs. 3.17 versus Rs. 0.72. 

• Reported operating EBIT margin was 9.4% versus 7.1%; excluding discontinued-operation expenses, adjusted EBIT margin was 9.8% versus 7.9%. 

• Operating EBITDA excluding discontinued-operation expenses was Rs. 2,805 million, or 14.2% of income, versus Rs. 2,319 million, or 13.3%. 

Outlook and guidance

• Outlook was cautiously positive, with a gradual recovery expected and low, but not eliminated, risk of a double-dip recession. 

• Healthcare reform and tighter regulation were expected to drive demand for outsourcing and efficiency improvements, particularly in healthcare and banking. 

• Asia Business Unit expected its redesigned delivery model to improve operating margins in FY11; growth focus included Indian banking and financial services. 

• Healthcare planned to expand client solutions and capabilities to address reform-driven complexity; telecom priorities included Philippines infrastructure, cross-selling, and new offerings.  