IT services company Accenture forecast fourth-quarter revenue below expectations and tempered its fiscal 2022 profit forecast on Thursday, threatened by rising inflation and the impact of a stronger dollar on its overseas earnings.

Foreign exchange headwinds have also forced companies such as Microsoft and Salesforce to temper their expectations for the year. A hawkish Federal Reserve and heightened geopolitical tensions have driven gains in the dollar against a basket of currencies over the last year.

Typically, a stronger dollar eats into the profits of companies that have sprawling international operations and convert foreign currencies into dollars. Accenture, which makes more than half of its revenue from outside the US, said it now expects a negative foreign-exchange impact of 4.5 per cent in fiscal 2022, worse than its previous forecast of a 3 per cent forex hit.

Accenture cut the higher end of its annual profit forecast range. It expects fiscal 2022 earnings per share to be in the range of $10.61 to $10.70, compared with its previous estimate of $10.61 to $10.81. It also forecast fourth-quarter revenue to be in the range of $15 billion to $15.5 billion, compared with analysts’ average expectation of $15.7 billion.

The forecast reflects the company’s assumption of a negative 8 per cent foreign-exchange impact, Accenture said.

Revenue for the quarter ended May 31st was $16.16 billion. Analysts on average had expected $16.03 billion in revenue. – Reuters

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