High costs pull down eTelecare's 1H profits
abs-cbnNEWS.com | 08/20/2008 7:09 PM
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Nasdaq-listed call center operator eTelecare Global Solutions said Wednesday its net income fell 78 percent in the first six months of the year due to high operational costs and one-time expense.
eTelecare reported a first half net income of $2.5 million, compared to $11.2 million last year.
Revenues, on the other hand, grew 20.3 percent to $148.6 million from $123.5 million.
For the second quarter alone, the company posted a net income of $645,000, down 89 percent from $5.97 million. eTelecare said it had a one-time expense of $1.2 million during the quarter for "professional fees associated with due diligence regarding an acquisition that the company elected not to pursue."
Without the said extraordinary expense, earnings would have met the company's expectations, said president and chief executive John Harris.
Cost of services went up from $85.8 million to $111.7 million while selling and administrative expenses climbed from $16.8 million to $22.9 million. It said 51 percent of the total of both were generated from the Philippines.
The company expects profit margins to be higher in the second half although not as high as previously anticipated because of upfront costs in production.
"Inflation in the Philippines has not affected our operations because [the country] has historically experienced deflationary pressure on wages due to fast-growing population and high unemployment. A reversal of these trends, increased wage pressure due to increased competition... harm our operating results," eTelecare said.
The company projects its net income to reach $9-$11 million in the final six months of the year, lower than the earlier forecast of $16-$19 million.
Revenues are seen to hit a range of between $300 million and $310 million.
"Our positive revenue outlook for 2008 and beyond, which comes despite reports that macroeconomic headwinds are affecting our sector, is supported by a strong pipeline as evidenced by the fact that since our prior quarter earnings call, we have added four new clients and 10 new programs," said Harris.
"In support of further top-line growth in 2009, last month we opened our seventh US delivery center.. " he added.
eTelecare operates facilities in the Philippines and the US. Its local call centers are located in Mandaluyong, Makati, Muntinlupa, Quezon City and Cebu. Judith Balea, abs-cbnNEWS.com
