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Capgemini starts 2016 with good momentum

27 Apr 2016

For Paul Hermelin, Chairman and Chief Executive Officer of Capgemini Group: “Capgemini’s growth rate is accelerating this year. We have diversified our sources of growth by strengthening our global presence and our sectorial capabilities.

Client demand continues to be driven by innovation and digital transformation, boosting the growth of our consulting and application services activities. Our Digital and Cloud offerings grew 28% in the first quarter.

Furthermore, the integration of IGATE, acquired in 2015 and which now operates under the Capgemini brand since January 2016, is progressing well, enabling us to achieve synergies faster than scheduled. IGATE’s innovative integrated platform offerings (known as ITOPS) recorded strong growth in Q1. Also the financial services sector, strengthened by this acquisition, was a major driver of Group growth in the first quarter of 2016, increasing 29.7% at constant exchange rates and 7.8% organically confirming the positive trend in this sector.

This strong momentum leads us to confirm our 2016 outlook for growth, operating margin and free cash-flow.”

 (In millions of euros)Change
 Q1 2015Q1 2016PublishedAt constant exchange ratesAt constant exchange rates and perimeter
Revenues2,7643,092+11.8%+13.9%+2.9%

All Group businesses reported strong growth in the first quarter supported by the consolidation of IGATE. Consulting Services (4% of Group revenues), boosted by demand in digital transformation, sustains its growth momentum at 7.4% year-on-year at constant exchange rates. Local Professional Services (15% of Group revenues) reported growth of 11.2% at constant exchange rates, boosted by the addition of IGATE’s engineering activities. Application Services (59% of Group revenues) which grew 16.2% at constant exchange rates is a major driver of Group’s growth, fuelled by strong market demand for Digital and Cloud offerings. Other Managed Services (22% of Group revenues), after integrating IGATE’s BPO (Business Process Outsourcing), ITOPS platform and infrastructure activities, reported growth of 11.2% at constant exchange rates.

North America reinforced its position as Capgemini’s largest region, generating 30% of Group revenues and a growth of 40.1% year-on-year at constant exchange rates with the integration of IGATE. At constant Group structure and exchange rates, growth remained strong (+6.9% like-for-like1) outside the Energy & Utilities sector where we experienced a marked slowdown in the last 9 months. The United Kingdom & Ireland region, boosted by a buoyant private sector with double-digit organic growth , reported an 8.1% increase in revenues at constant exchange rates. France starts the year on a stronger momentum than in 2015 with revenue growth of 2.0% driven by financial services, consumer goods and retail. In the Rest of Europe region (which now includes Benelux), momentum is strong in all major sectors and large countries with the exception of the Benelux, leading to 6.1% growth at constant exchange rates. Finally, the Asia-Pacific and Latin America region grew 6.4% at constant exchange rates, with an economic environment that remains difficult in Brazil while Asia-Pacific continues to be very dynamic.

HEADCOUNT

At March 31, 2016, the total Group headcount stood at 182,908. Offshore employees totaled 99,724, representing 55% of the total workforce.

BOOKINGS

New orders recorded in Q1 2016 amounted to €3,128 million. This represents a 17.6% increase at constant exchange rates compared to Q1 2015.

OUTLOOK FOR 2016

Based on its first quarter results, the Group confirms its objectives for 2016: it forecasts revenue growth at constant exchange rates of 7.5% to 9.5%, an operating margin of 11.1% to 11.3% and organic free cash flow generation in excess of €850 million.

The Group estimates the negative impact of currency fluctuations on revenues at -2%, primarily due to the appreciation of the euro against the pound sterling and the Brazilian real.

APPENDIX

DEFINITION

Organic growth, or like-for-like growth, in revenues is the growth rate calculated at constant Group perimeter and exchange rates. The Group perimeter and exchange rates used are those for the published fiscal year.

REVENUE BY REGION

 RevenuesChange
 Q1 2015 (In millions of euros)Q1 2016 (In millions of euros)At constant exchange ratesPublished
North America662938+40.1%+41.5%
United Kingdom and Ireland504525+8.1%+4.3%
France620633+2.0%+2.0%
Rest of Europe738780+6.1%+5.6%
Asia-Pacific and Latin America240216+6.4%-9.9%
TOTAL2,7643,092+13.9%+11.8%

REVENUE BY BUSINESS

 % RevenuesChange
 Q1 2015Q1 2016At constant exchange rates
Consulting Services4%4%+7.4%
Local Professional Services15%15%+11.2%
Application Services57%59%+16.2%
Other Managed Services24%22%+11.2%
TOTAL100%100%+13.9%

UTILIZATION RATES

 Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016
Consulting Services71%71%68%70%70%
Local Professional Services81%82%84%83%82%
Application Services81%81%82%83%81%

Note: 2015 utilization rates have been restated to take better account of the onshore / offshore mix.

HIGHLIGHTS

  • Opening of the 9th Group innovation center in San Francisco, the nerve center of the Applied Innovation Exchange global network developed by Capgemini to help companies accelerate the integration of technological innovations.
  • Cloud Services: expanded collaboration with Amazon Web Services. 
  • Signature of a three-year contract with HMRC in the United Kingdom.
  • Personal data protection: dual certification by CNIL of Capgemini’s Binding Corporate Rules.
  • Acquisition of oinio, a leading Salesforce partner in Europe.
  • Acquisition of Fahrenheit 212, a US innovation strategy consulting firm.

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 Cap Gemini’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 Cap Gemini’s Registration Document available on Cap Gemini’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 Cap Gemini. 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, Cap Gemini 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

With 180,000 people in over 40 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2015 global revenues of EUR 11.9 billion. Together with its clients, Capgemini creates and delivers business, technology and digital solutions that fit their needs, enabling them to achieve innovation and competitiveness. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.

Rightshore® is a Capgemini trademark

1Definition in Appendix https://www.youtube.com/embed/42x5B2ZCOX0?feature=oembed&enablejsapi=1&origin=https%3A%2F%2Fwww.capgemini.com