Hewitt posts $115.9m loss for 2006
GLOBAL - Hewitt Associates, which replaced its chief executive in September, has reported a net loss of $115.9m (€90.1m) for the 2006 fiscal year - compared to a profit of $134.7m the year before.
The consulting firm was hit by $264m of charges related to its human resources business process outsourcing business. The fall-out from the HR BPO business coincided with the departure of former chief executive Dale Gifford and other executives. The company reported a "severance-related expense" of $7m in the year.
Annual revenues slipped 2% to $2.79bn.
In the fourth quarter, net income fell 43.3% to $23m from $40.5m a year before, while revenues were down 1% at $713.3m. It said: "Reported results in the fourth quarter reflect higher performance-based compensation as compared to the prior-year quarter of $34m."
Consulting segment income in the fourth quarter fell 31% to $33.5m, with margins declining to 15.2% from 23.2% while segment revenues rose 5% to $220.1m.
"Fiscal 2006 was a challenging year for our company on many fronts," said new chairman and chief executive Russell Fradin.
"Despite solid performance in Benefits Outsourcing and Consulting, we significantly under-delivered on our financial objectives for the year, reflecting deterioration in the expected profitability of some of our HR BPO contracts.
"Looking ahead, we're refocusing on the areas that will drive greater value and more consistent, predictable results. Our attention in the near-term will be on accelerating the growth of the Benefits Outsourcing and Consulting businesses, and redefining our approach to the HR BPO business," he added.
Earlier this week rival Watson Wyatt reported first-quarter net income rose to $24.8m from $13.9m, with pro-forma revenues up 11% at $336m.
Meanwhile, Watson Wyatt has said in a filing at the Securities and Exchange Commission that it planned to make $28m of pension contributions in the 2007 fiscal year.