ROSELAND, N.J. (AP) — Automatic Data Processing Inc., the world's biggest payroll processor, said Wednesday its fiscal fourth-quarter net income rose 7 percent as it benefited from some new hiring in a slowly improving economy.
The earnings met Wall Street's expectations but it forecast results for the current fiscal year that are below analyst estimates. The company said low interest rates and the tepid job-market recovery will limit profits.
Net income for the April-through-June period was $258.4 million, or 53 cents per share, up from $241.8 million, or 48 cents per share, in the second quarter of 2011.
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Revenue was $2.64 billion, up 5 percent from $2.51 billion.
Analysts surveyed by FactSet were looking for earnings of 53 cents per share on revenue $2.65 billion.
ADP, which is based in Roseland, N.J., provides payroll processing and benefits administration for companies. Its profits and revenue, which both grew modestly in fiscal 2012, are heavily dependent on the economy and the health of the job market.
The company said revenue from its core employer services division increased by 7 percent in the fourth quarter as the number of employees on its U.S. clients' payrolls grew by 3.2 percent.
ADP also provides back-office services to dealers of vehicles, including autos, motorcycles and RVs. The company said the stronger market for autos in North America helped that division grow 7 percent.
The company said it expects an increase of 5 percent to 7 percent in both earnings and revenue in fiscal 2013. Analysts expect earnings per share to grow 9 percent and revenue to grow 8 percent for the year ending next June.
The strong dollar and low interest rates will hurt results, ADP said. A rising dollar cuts into income earned overseas that's translated back into the dollar. Low rates hurt ADP because it invests the client funds that pass through its payroll division, keeping the interest earned.
For the past fiscal year, net income was $1.39 billion, or $2.82 per share, up from $1.25 billion, or $2.52 per share, the year before. Excluding a gain from the sale of assets in the second quarter, the company said earnings were $2.74 per share. Revenue was $10.67 billion, up 8 percent from $9.88 billion.
ADP shares declined 6 cents to $56.49 in early afternoon trading. They remain near the all-time high of $57.99, reached on Monday.
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