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Capgemini SE : Capgemini reports strong Q3 and raises its growth target for 2018

Media relations:
Florence Lièvre
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E-mail: florence.lievre@capgemini.com

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Vincent Biraud
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E-mail: vincent.biraud@capgemini.com

Capgemini reports strong Q3 and raises its growth target for 2018

Paris, October 24, 2018 - The Capgemini Group achieved consolidated revenues of €3,228 million in Q3 2018, up 8.7% year-on-year at constant exchange rates*.

Paul Hermelin, Chairman and Chief Executive Officer of the Capgemini Group commented: "The Group continues to grow at a robust pace, driven by the ongoing development of Digital and Cloud activities. Momentum remains strong in North America, our largest market, with a double-digit revenue progression. In Europe, the United Kingdom returned to growth and France reported an excellent quarter.

With the launch of Capgemini Invent last month, we`re well placed to capture even more of the demand for digital innovation, consulting and transformation coming from the heads of business and operations of leading groups. We benefit from a unique market positioning, thanks to the combination of our experience in consulting, data science and emerging technologies, together with expertise brought to the Group by recently acquired digital companies, such as LiquidHub this year.

Our momentum will remain strong in Q4 2018 despite an even higher comparison basis and we now expect to reach growth of 6.8%[1] at constant exchange rates. This leads us to raise our full year 2018 target: we now aim for revenue growth of above 7.5% at constant exchange rates."

  (In millions of euros)   Change
Revenues
(IFRS 15)
2017
(restated[2])
2018

 
  At current
exchange rates
At constant
exchange rates*
Q3 2017 2,996 3,228   +7.7% +8.7%
9 months 9,276 9,695   +4.5% +8.2%

Group growth remained strong during the quarter despite a high Q3 2017 comparison basis. Revenues totaled €3,228 million, up 7.7% year-on-year at current exchange rates and 8.7% at constant exchange rates. Organic growth* (i.e. excluding the impact of currency fluctuations and changes in Group scope) was 6.3%.

Digital & Cloud activities grew over 20% at constant exchange rates in Q3 and now generate around 45% of Group revenues.

In the first nine months of the year, Group revenues grew 8.2% at constant exchange rates and 6.4% on an organic basis.

OPERATIONS BY REGION

In Q3, North America revenues (33% of Group revenues) grew 12.9% at constant exchange rates, a particularly robust performance given the high comparison basis in Q3 2017. As in the first-half, growth was mainly driven by the Financial Services, Consumer Products and Retail sectors. We also benefited from the impact of Digital acquisitions in the reference period.

The United Kingdom and Ireland (12% of Group revenues) returned to growth as expected. Revenues rose 4.0% at constant exchange rates, driven by an acceleration in the Energy and Utilities sector and an upturn in the Public sector.

France (21% of Group revenues) reported a strong 6.9% growth. Performance continues to be fueled by the Energy and Utilities, Financial Services and Consumer Products and Retail sectors.

The Rest of Europe region (27% of Group revenues) maintained momentum, posting Q3 growth of 7.7% at constant exchange rates. The Manufacturing and Consumer Products and Retail sectors were the main driving forces.

Finally, the Asia-Pacific and Latin American region (7% of Group revenues) reported revenue growth of 7.5% at constant exchange rates. In Asia-Pacific, which accounts for around three-quarters of activity in this region, growth was fueled by the Manufacturing and Public sectors. Latin America reported revenue growth for the second quarter in a row.

OPERATIONS BY BUSINESS

Consulting Services (6% of Group revenues) reported Q3 growth of 47.2% at constant exchange rates. This primarily reflects the impact of acquisitions in the reference period but also a positive momentum in the main regions. Activity was particularly buoyant in the Financial Services and Manufacturing sectors.

Technology & Engineering Services (15% of Group revenues) progressed 6.4% at constant exchange rates, with a significant contribution from the Manufacturing, Energy and Utilities sectors. While North America remained the most dynamic region, all geographies contributed to this growth, with an acceleration in France.

Application Services (64% of Group revenues) continue to benefit from customer demand related to new Digital and Cloud needs and maintained a high rate of growth. Q3 revenue increased 10.7% at constant exchange rates, with all regions reporting high single digit to double digit growth rates.

Other Managed Services (15% of Group revenues) declined 5.8% at constant exchange rates, with improved infrastructure services performance masked by a slowdown in Business Process Outsourcing activities.  

HEADCOUNT

At September 30, 2018, the Group`s total headcount stood at 208,800, up 5.1% year-on-year, with nearly 120,000 employees in offshore centers (57% of the total headcount).

BOOKINGS

Bookings totaled €2,808 million in Q3 2018, a 6.7% increase at constant exchange rates year-on-year.

OUTLOOK

For 2018, the Group:

  • raises its growth target and now aims for revenue growth at constant exchanges rates of above 7.5% (versus revenue growth "slightly above 7%" previously), and
  • confirms its objectives to increase profitability, with an operating margin of 12.0% to 12.2% and to generate organic free cash flow in excess of €1 billion.

In addition, the Group confirms that the impact of currency movements on revenues should be limited to -3 points in 2018.

CONFERENCE CALL

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 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://www.capgemini.com/results.

PROVISIONAL CALENDAR

February 14, 2019                   2018 results
April 25, 2019              Publication of 2019 Q1 revenues
May 23, 2019              Combined Shareholders` Meeting

DISCLAIMER

This press release may contain forward-looking statements. Such statements may include projections, estimates, assumptions, statements regarding plans, objectives, intentions and/or expectations with respect to future financial results, events, operations and services and product development, as well as statements, regarding future performance or events. Forward-looking statements are generally identified by the words "expects", "anticipates", "believes", "intends", "estimates", "plans", "projects", "may", "would" "should" or the negatives of these terms and similar expressions. Although Capgemini`s management currently believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking statements are subject to various risks and uncertainties (including, without limitation, risks identified in Capgemini`s Registration Document available on Capgemini`s website), because they relate to future events and depend on future circumstances that may or may not occur and may be different from those anticipated, many of which are difficult to predict and generally beyond the control of Capgemini. Actual results and developments may differ materially from those expressed in, implied by or projected by forward-looking statements. Forward-looking statements are not intended to and do not give any assurances or comfort as to future events or results. Other than as required by applicable law, Capgemini does not undertake any obligation to update or revise any forward-looking statement.

This press release does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in France, the United States or any other jurisdiction.

About Capgemini

A global leader in consulting, technology services and digital transformation, Capgemini 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 organizations to realize their business ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural company of 200,000 team members in over 40 countries. The Group reported 2017 global revenues of EUR 12.8 billion.
Visit us at www.capgemini.com. People matter, results count.

*          *

*

APPENDIX[3]

DEFINITIONS

Organic growth, or like-for-like growth, in revenues is the growth rate calculated at constant Group scope and exchange rates. The Group scope and exchange rates used are those for the reported period. Exchange rates for the reported period are also used to calculate growth at constant exchange rates.

Reconciliation of growth rates Q3 2018 9 months
2018
Organic growth +6.3% +6.4%
Changes in Group scope +2.4 pts +1.9 pt
Growth at constant exchange rates +8.7% +8.2%
Exchange rate fluctuations -1.0 pt -3.7 pts
Reported growth +7.7% +4.5%

Currency impacts since the beginning of the year are linked to the appreciation of the euro against most other currencies and primarily the U.S. dollar.

REVENUES BY REGION

  Revenues
(In millions of euros)
  Change
(Q3 2018 / Q3 2017)
  Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
  At constant
exchange rates
Reported
North America 961 969 953 990 960 1,069 1,076   +12.9% +12.9%
United Kingdom and Ireland 417 428 371 364 386 395 387   +4.0% +4.7%
France 662 659 620 734 698 703 664   +6.9% +6.9%
Rest of Europe 831 856 813 915 888 909 864   +7.7% +6.2%
Asia-Pacific and Latin America 245 252 239 246 221 238 237   +7.5% -1.1%
TOTAL 3,116 3,164 2,996 3,249 3,153 3,314 3,228   +8.7% +7.7%


  Revenues
(In millions of euros)
  Change
  9 months
2017
9 months
2018
  At constant
exchange rates
 

Reported
North America 2,883 3,105   +15.6% +7.7%
United Kingdom and Ireland 1,216 1,168   -2.6% -3.9%
France 1,941 2,065   +6.3% +6.3%
Rest of Europe 2,500 2,661   +7.8% +6.4%
Asia-Pacific and Latin America 736 696   +4.8% -5.6%
TOTAL 9,276  9,695    +8.2% +4.5%

REVENUES BY BUSINESS

  Revenues
(In millions of euros)
  Change
  Q3 2017 Q3 2018   At constant exchange rates

 
Consulting Services 134 194   +47.2%
Technology & Engineering Services 445 474   +6.4%
Application Services 1,876 2,056   +10.7%
Other Managed Services 541 504   -5.8%
TOTAL 2,996 3,228   +8.7%

UTILIZATION RATES

  Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
Consulting Services 71% 72% 69% 72% 72% 73% 67%
Technology & Engineering Services 82% 84% 85% 84% 83% 85% 84%
Application Services 81% 81% 82% 83% 81% 82% 83%





* The terms and Alternative Performance Measures marked with an (*) are defined and/or reconciled in the appendix to this press release.
[1] The impact of changes in Group scope is expected to be around 1.8 points in Q4.

[2] Unless otherwise stated, 2017 revenue figures presented in this press release have been restated for the impact of IFRS 15, applicable from January 1, 2018.

[3] Note that in the appendix, certain totals may not equal the sum of amounts due to rounding adjustments.

Capgemini reports strong Q3 and raises its growth target for 2018


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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Capgemini SE via GlobeNewswire

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