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For Paul Hermelin, Chairman and Chief Executive Officer of Capgemini Group: “Group growth accelerated in the third quarter. In North America, we reaped the benefits of our investments with a 6.9% growth at constant exchange rates. The strong momentum of our activities in the Manufacturing and Retail & Consumer Goods sectors drives our performance in this region.
Our Digital and Cloud activities continue to grow at a rapid pace (+23% at constant exchange rates in Q3). The acquisition of the US e-commerce expert, Lyons Consulting Group, further strengthened our position in this segment as a global leader in digital commerce.
Finally, our ongoing ability to accompany our clients’ transformations has been a key growth driver for the Group since its creation 50 years ago, as demonstrated by the worldwide agreement signed over the summer with McDonald’s. We’ve become their global IT strategic provider notably for the digitalization of their customer experience.
With these third-quarter results, we confirm our targets for revenue growth, operating margin and free cash flow for 2017.”
1 – As announced on the publication of the outlook for 2017, growth at constant exchange rates and organic growth are presented after restating 2016 and 2017 revenues for the Brazilian equipment resale activity that is being discontinued.* The terms and non-GAAP measures marked with an (*) are defined and/or reconciled in the appendix to this press release.
The Group generated revenues of €3,046 million in Q3 2017, up 0.9% on Q3 2016 reported revenues and 3.4% at constant exchange rates. Organic growth* (i.e. excluding the impact of currency fluctuations and changes in Group scope) was 3.1%. Digital & Cloud revenues grew 23% at constant exchange rates. The multi-year contract signed with McDonald’s to support its digital transformation is a good example of this growth momentum.
In the first nine months, revenues grew 3.2% at constant exchange rates and 2.9% on an organic basis with Digital & Cloud accounting for 36% of Group revenues.
Consulting Services (4% of Group revenues) grew 16.0% at constant exchange rates in Q3, notably thanks to the investments made in Digital in North America and a sharp increase in the Rest of Europe. Technology & Engineering Services (15% of Group revenues) reported 3.8% revenue growth at constant exchange rates, spurred by North America and France. Application Services (63% of Group revenues) increased 5.7% at constant exchange rates and remain the driving force behind Group growth. Strong demand for innovative offerings continues to fuel Application Services momentum, with growth rates of around 10% in France, Central Europe, Scandinavia, Italy and Asia. Other Managed Services (18% of Group revenues) reported a 6.3% decrease in revenues: the decline in Infrastructure Services in the United Kingdom – anticipated since the beginning of the year – and in Latin America was only partially offset by growth in Business Services.
In Q3, the growth momentum accelerated in North America (31% of Group revenues) reflecting the impact of the investments made over the past year. Growth reached 6.9% at constant exchange rates, driven by the Manufacturing and Retail & Consumer Goods sectors. The positive growth recorded this quarter in the Energy & Utilities sector also contributed to the good performance. The United Kingdom & Ireland (13% of Group revenues) reported revenues down 10.8%, reflecting a decline in the public sector in line with our forecast and a stable private sector (65% of region revenues). In France (21% of Group revenues), Q3 revenue growth of 4.7% was mainly driven by the Financial Services and Retail & Consumer Goods sectors. The Rest of Europe (27% of Group revenues) reported Q3 revenue growth of 6.8% at constant exchange rates. Revenue growth is around 10% in Germany, Italy and Scandinavia, with the Manufacturing and Financial Services sectors as key drivers and held stable in Benelux. Finally, the Asia-Pacific and Latin America region (8% of Group revenues) reported revenue growth of 2.0% at constant exchange rates. Latin America contracted significantly, while Asia-Pacific grew close to 10%.
At September 30, 2017, the Group’s total headcount is 198,600, an increase of 5.9% year-on-year, with nearly 113,000 employees in offshore centers (57% of the total headcount).
Bookings totaled €2,700 million in Q3 2017, a 1% decline at constant exchange rates year-on-year.
For 2017, the Group forecasts revenue growth at constant exchange rates of 3.0%, an operating margin of 11.7% to 11.9% and organic free cash flow generation in excess of €950 million.
Paul Hermelin, Chairman and Chief Executive Officer and Aiman Ezzat, Chief Financial Officer, will present this press release during a conference call in English to be held today at 8 a.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.
February 15, 2018 – Publication of 2017 annual results
May 2, 2018 – Publication of Q1 2018 revenues
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.
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 2016 global revenues of EUR 12.5 billion.
Visit us at www.capgemini.com. People matter, results count.
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 published fiscal year. Exchange rates for the published fiscal year are also used to calculate growth at constant exchange rates.
As announced on the publication of the outlook for 2017, organic growth and growth at constant exchange rates are presented after restating 2016 and 2017 revenues for the Brazilian equipment resale activity that is discontinued, to enable comparable presentation of quarterly trends:
Q3 currency impacts primarily concern the depreciation of the pound sterling and the U.S. dollar against the euro. The impact of discontinued operations reflects changes in the Brazilian equipment resale business, which generated revenues of €5 million in Q3 2016.
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