Capgemini posts Q3 growth of 5.9%
Capgemini Group achieved consolidated revenues of €3,468 million in Q3 2019, up 7.4% year-on-year at current exchange rates and 5.9% year-on-year at constant exchange rates.
- Revenues of €3,468 million, up 5.9% at constant exchange rates
- Digital & Cloud grew over 20% and now account for more than 50% of Group revenues
- Bookings up 19.6% at constant exchange rates
- 2019 Outlook: annual revenue growth now expected to be around 5.5%, improved margin and organic free-cash flow objectives confirmed
Paris, October 24, 2019 – Capgemini Group achieved consolidated revenues of €3,468 million in Q3 2019, up 7.4% year-on-year at current exchange rates and 5.9% year-on-year at constant exchange rates*.
Paul Hermelin, Chairman and Chief Executive Officer of Capgemini Group commented: “The momentum observed since the beginning of the year continued in Q3. Our performance improved in North America, as we predicted, while growth remained robust in Continental Europe.
We see a softer economic environment developing in this year end. Consequently, we are now targeting annual revenue growth at constant currencies of around 5.5% – a rate which was the lower end of the range announced in February. We confirm our targets in terms of improved profitability and stronger organic free cash flow. This will represent a solid performance for 2019. Our strong growth in Digital & Cloud and our healthy bookings lead us to look ambitiously at 2020.
In addition, Capgemini’s friendly tender offer for Altran opened on October 16. We are confident this operation will be successfully completed and in our ability to create a world leader in the digital transformation of industrial companies.”
Group growth remained strong in Q3. Revenues increased 7.4% year-on-year at current exchange rates and 5.9% at constant exchange rates. Organic growth* (i.e. excluding the impact of currency fluctuations and changes in Group scope) was 5.0%.
Digital & Cloud activities grew over 20% at constant exchange rates in Q3 and now generate over 50% of Group revenues.
In the first nine months of the year, Group revenues grew 6.1% at constant exchange rates and 4.9% on an organic basis.
OPERATIONS BY REGION
As anticipated, North America revenues (34% of Group revenues) reported this quarter an improvement, growing 3.5% year-on-year at constant exchange rates in Q3. This growth was mainly driven by the TMT (Telecoms, Media & Technology) and Services sectors.
Q3 activity remained robust in the United Kingdom & Ireland (12% of Group revenues). Revenue rose 6.3% at constant exchange rates, boosted by the Manufacturing, Financial Services and Energy & Utilities sectors.
In France (20% of Group revenues), activity increased 5.6% at constant exchange rates in the quarter, with the Services and Manufacturing sectors particularly dynamic.
The Rest of Europe region (26% of Group revenues) maintained momentum, posting Q3 growth of 6.1% at constant exchange rates. The Consumer Goods & Retail and Manufacturing sectors were the main driving forces.
Finally, the Asia-Pacific and Latin America region (8% of Group revenues) reported revenue growth of 16.6% at constant exchange rates. This region benefited from strong momentum in the Asia-Pacific area, particularly in the Financial Services and Manufacturing sectors.
OPERATIONS BY BUSINESS
Strategy & Transformation consulting services (7% of Group total revenues*) now grouped under Capgemini Invent, recorded Q3 growth of 14.6% at constant exchange rates. Momentum was particularly robust in the Manufacturing and Energy & Utilities sectors.
Applications & Technology services (70% of Group total revenues) maintained a strong rate of growth, with Q3 revenue up 4.7% year-on-year, at constant exchange rates. Activity was particularly strong for this core business in the Energy & Utilities, Services, Consumer Goods & Retail and Manufacturing sectors.
Finally, Operations & Engineering services (23% of Group total revenues) grew 7.7% at constant exchange rates. All businesses contributed to this performance. The DEMS business (Digital Engineering & Manufacturing Services) reported double-digit growth, while Infrastructure Services growth was further boosted by the contribution of Leidos Cyber, the US cybersecurity company acquired at the beginning of the year.
At September 30, 2019, the Group’s total headcount stood at 219,500, up 5.1% year-on-year, with over 126,000 employees in offshore centers (58% of total headcount).
Bookings totaled €3,411 million in Q3 2019, a 19.6% increase at constant exchange rates year-on-year.
Given the softer economic environment developing in this year end, the Group now targets for 2019 a revenue growth at constant exchange rates of around 5.5%, a rate which was the lower end of the previously announced growth range.
The Group confirms its targets in terms of improved profitability with an operating margin of 12.3% to 12.6% and stronger organic free cash flow – on a comparable basis – of over €1.1 billion.
This outlook does not take into account the proposed acquisition of Altran, while it does include the impact of the application of IFRS 16 from January 1, 2019 on the operating margin (around +5 basis points) and on the organic free cash flow definition (around -€50 million), as detailed in the appendix to the press release publishing this outlook, issued on February 14, 2019.
PROPOSED ACQUISITION OF ALTRAN TECHNOLOGIES
On June 24, 2019, Capgemini and Altran Technologies (Euronext Paris: ALT), the global leader in Engineering and R&D services, jointly announced the proposed acquisition of Altran by Capgemini, through a friendly public offer at €14.00 per Altran share, payable in cash. This project seeks to create a global digital transformation leader for industrial and tech companies.
On September 22, 2019, Altran’s Board of Directors considered the friendly tender offer to be in the interests of Altran, its shareholders and employees, and recommended that Altran’s shareholders tender their shares to the offer. This reasoned opinion (avis motivé) was issued inter alia after having reviewed the report of the independent expert, Finexsi, appointed in accordance with applicable regulations.
The French Financial Markets Authority (Autorité des marchés financiers – AMF) issued its clearance to the public tender offer on October 14, 2019, and on the same day granted its visa to Capgemini’s offer document and Altran’s response document. Capgemini has now obtained all the required regulatory clearances, including from the Committee on Foreign Investment in the United States (CFIUS), from the antitrust authorities in India, the United States, Morocco and today from the European Commission. The offer opened on October 16 and the closing date will be set by the AMF.
Paul Hermelin, Chairman and Chief Executive Officer and Carole Ferrand, Chief Financial Officer, will present this press release during a conference call in English to be held today at 6.30 p.m. Paris time (CET). You can follow this conference call live via webcast at the following link. A replay will also be available for a period of one year.
All documents relating to this publication will be placed online on the Capgemini investor website at https://investors.capgemini.com/en/financial-results/.
February 13, 2020 – FY 2019 results
April 28, 2020 – Q1 2020 revenues
May 20, 2020 – Combined Shareholders’ Meeting
The full calendar of upcoming events can be found online.
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APPENDIX: SEE PDF
* The terms and Alternative Performance Measures marked with an (*) are defined and/or reconciled in the appendix to this press release.
Capgemini is a global leader in consulting, digital transformation, technology, and engineering services. The Group is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables organisations to realize their business ambitions through an array of services from strategy to operations. A responsible and multicultural company of 265,000 people in nearly 50 countries, Capgemini’s purpose is to unleash human energy through technology for an inclusive and sustainable future. With Altran, the Group reported 2019 combined global revenues of €17 billion.
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