Aug 4 (Reuters) - Kyndryl Holdings' ( KD ) first-quarter

profit soared more than five-fold, the company said on Monday,

as the former IBM unit's renegotiation of contracts

helped improve margins on its services.

The company, formerly IBM's ( IBM ) infrastructure services

business, has been restructuring multiple no-margin contracts it

inherited from the Big Blue to generate higher profits, but at

the cost of revenue growth.

Kyndryl's ( KD ) net income soared to $56 million for the June

quarter from a profit of $11 million in the year-ago-period,

while revenue was flat at $3.74 billion.

The software provider's quarterly net income margin

stood at 1.5%, up from 0.3% in the year-ago period.

Businesses have prioritized spending on essential software

amid macroeconomic uncertainty spurred by U.S. President Donald

Trump's ongoing global trade negotiations. This has shielded

companies like Kyndryl ( KD ), whose software helps businesses conduct

day-to-day operations and enable artificial intelligence

integration.

"We're not completely immune to it (macroeconomic

conditions), but definitely we're significantly insulated

because of the nature of what we do. It is generally mission

critical and not discretionary," CFO David Wyshner told Reuters.

Sales in the consulting unit grew 30% in the June

quarter, as clients seek expertise on integrating AI technology.

Revenue tied to large cloud providers grew 86% to $400

million in the quarter.

Customers continue to use a hybrid cloud approach and the

company benefits from multi-cloud management, Oppenheimer

analysts said last month.

The company reaffirmed its forecasts for the fiscal

year, still expecting constant-currency revenue growth of 1% in

its current fiscal year.

Kyndryl CFO Wyshner does not expect Trump's massive package

of tax and spending cuts, signed into law last month, to have a

significant impact on the company in the next two or three

years.

"But as we look at the longer-term, this will be helpful to

us, potentially by a point or two in terms of our longer term

effective tax rate," Wyshner said.