Paxys earnings drop 54% due to peso rise

Listed call center firm Paxys Inc. reported a 54-percent drop in its net profit last year to P233.3 million from P507.27 million a year earlier due to the appreciation of the peso against the dollar and an increase in cost of services.

In its annual report for 2007, Paxys said net income ratio fell to seven percent due to a strong peso which took its toll in translating the dollar revenues of the call center to peso.

Profit margin declined to 18 percent due to an increase in operating expenses attributable to the call center operations from the new sites put up.

Consolidated service income rose 20 percent to P3.3 billion due to the full year consolidation of the results of Australia-based Smart Salary Ltd., which Paxys acquired on June 5, 2006 for P1.5 billion.

Gross profit went up 10.46 percent  to P1.5 billion from the previous year’s P1.3 billion due to Smart Salary’s contribution.

Basic earnings per share fell 54.5 percent to  25 centavos from 55 centavos per share. 

Paxys said the call center business under Advanced Contact Solutions Inc. (ACS) accounted for 73 percent of group-wide revenues.

ACS posted a net income of P203 million, down 61 percent from P525 million on   service revenues of P2.4 billion. As of end-December last year, the company had a total of 7,118 seats.

About 90 percent of the call center revenues are in dollars and were covered by forward contracts on various dates.  But the hedge was not able to fully cover the revenues due to  continuing appreciation of the peso.

Smart Salary, on the other hand, reported a slight increase in net earnings to A$17.12 million on the back of an 18-percent growth in revenues to A$20.23 million or P783 million.