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DXC Relocates Many Of Its 4,000 Ukrainian Workers

C.J. Fairfield

‘In April, we exited the Russian market and successfully took care of our customers and colleague of that business. This action fulfilled DXC‘ commitment to exit the region and will reduce our revenues by approximately $140 million per year,’ says Mike Salvino, CEO of DXC Technology.

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DXC Technology has moved many of its 4,000 workers in Ukraine out of the conflict zone to western Ukraine, Poland and Romania amid Russia’s ongoing invasion of Ukraine.

The Ashburn, Virginia-based solution provider –No. 4 on CRN’s 2021 Solution Provider 500 list­–will also have relocated all of its nondomestic and corporate Russian employees out of Russia by the end of June, said Mike Salvino, DXC CEO, during its fourth quarter earnings call last week.

“We continue to stand with the people of Ukraine, and our thoughts are focused on a rapid resolution of the conflict,” Salvino said. “While Russia’s invasion of Ukraine has been a tragedy, this has not and will not have a significant impact on our business.”

On March 4, DXC exited the Russian market but provided support to employees there in the wake of Russia’s assault on neighboring Ukraine.

In April, the company also exited the Russian market and “took care of our customers and colleagues of that business.”

[Related: DXC Technology’s Most Highly Compensated Executives In 2021]

“This action fulfilled DXC‘s commitment to exit the region and will reduce our revenues by approximately $140 million per year,” Salvino said.

And since relocating its Ukrainian employee, Salvino said productivity has been above 85 percent since the conflict began.

“Our transformation journey starts with our people, and we are honored by the commitment, dedication and caring we have seen from our people in the region and throughout the company over the past few months,” he said. “Our solid execution of these commitments has enabled us to have strong customer retention, has made our business better and position us to effectively deal with the conflict as it continues.”

DXC CFO Ken Sharp said the ongoing conflict in Ukraine has affected revenue though, explaining the company is on a “transformation journey” and that the company is on track to be in a “much better place.”

DXC reported $4.01 billion in revenue for the fourth quarter, down 8.6 percent as compared to the prior year period, and down 2.8 percent on an organic basis.

“Our Q4 organic revenue declined 2.8 percent, impacted by 75 basis points due to Russia‘s invasion of Ukraine,” Sharp said. “Adjusted EBIT margin of 8.5 percent, year-over-year, our margin expanded 100 basis points. Margins were impacted by 40 basis points related to taking care of our Ukraine and Russian colleagues and exiting our Russian business.”

Gross margins were also lower by 210 basis points due to accelerated hiring and higher utility costs in Europe, he said. Its GBS growth was impacted by about 150 basis points due to Russian’s invasion. The GBS profit margin was 14.5 percent, down 130 basis points year-over-year. GBS margins were impacted by about 100 basis points due to Russia‘s invasion of Ukraine.

Diluted earnings per share were $2.14 and Non-GAAP diluted earnings per share were $0.84 in Q4 FY22. Sharp also reporter bookings of $4.8 billion and $1.5 million of operating cash flow in FY22. DXC also returned $271 million to shareholders by repurchasing 8.2 million shares in Q4 FY22, bringing FY22 repurchases to $634 million or 18.8 million shares.

“For fiscal year 2023, we expect additional costs related to taking care of our colleagues and exiting Russia million, and our tax rate will be back to a normalized level of 25 percent,” Sharp said.

DXC’s fiscal year ends on March 31. On Wednesday, DXC’s stock was at $34.24 per share, down about 3 percent from where it stood at the start of the year.

 

 

 

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