Capgemini reports strong half-year performance: robust growth and
improved operating margin
Media
relations:Victoire GruxTel.: +33 6 04 52 16
55victoire.grux@capgemini.com
Investor relations:Vincent
BiraudTel.: +33 1 47 54 50 87vincent.biraud@capgemini.com
Capgemini reports strong half-year
performance: robust
growth and improved operating margin
-
H1 2023 revenues of
€11,426 million, up
+6.9%
-
Growth at constant exchange
rates* of
+7.9% in H1 and +5.2% in Q2
-
Operating margin rate* up
+20 basis points
to 12.4%
-
Organic free cash flow* of
-€53
million
-
€2 billion to be invested
over 3 years in
Artificial
Intelligence
Paris, July 28, 2023 – The
Board of Directors of Capgemini SE, chaired by Paul Hermelin,
convened yesterday in Paris to review and adopt the accounts1 of
Capgemini Group for the first half of 2023.
Aiman Ezzat, Chief Executive Officer of the
Capgemini Group, said: “The Group delivered another solid
performance in the first half. In a softer economic environment, as
expected, we achieved 7.9% revenue growth at constant exchange
rates and operating margin improvement. These results put us among
the leaders in our industry.
Thanks to a strong strategic positioning, we
continue to gain market share as we accompany our clients in their
transition towards a digital and sustainable economy.
I am convinced that generative AI will play a
major role in this transition. The Group will invest €2 billion in
Artificial Intelligence to build its leadership in this
breakthrough technology, that must be deployed responsibly,
reliably, and sustainably. We are developing a portfolio of
industry-specific offers and signing strategic partnerships,
notably with Google Cloud and Microsoft, while training most of our
workforce through our Data & AI Campus to fully leverage the
power of generative AI in our operations. We have many client
projects underway, a strong pipeline, and plan to double Data &
AI teams to 60,000 in the next three years.
We confirm all our 2023 objectives announced at
the beginning of the year for revenue growth, operating margin
improvement and free cash flow.”
1ST
HALF KEY FIGURES
(in millions of euros) |
H12022 |
H12023 |
Change |
Revenues |
10,688 |
11,426 |
+6.9% |
Operating margin* |
1,301 |
1,413 |
+9% |
as a % of revenues |
12.2% |
12.4% |
+0.2pt |
Operating profit |
1,068 |
1,151 |
+8% |
as a % of revenues |
10.0% |
10.1% |
+0.1pt |
Net profit (Group share) |
667 |
809 |
+21% |
Basic earnings per share (€) |
3.91 |
4.70 |
|
Normalized earnings per share (€)* |
5.03 a |
5.80 |
|
Organic free cash flow* |
193 |
-53 |
-246 |
Net cash / (Net debt)* |
(4,094) |
(3,244) |
|
a Excluding tax expenses of 29 million euros in H1 2022, related to
the impact of the US tax reform. |
Capgemini generated revenues of
€11,426 million in H1 2023, up +6.9% on a reported basis and +7.9%
at constant exchange rates. Organic growth* (i.e., excluding the
impacts of currency fluctuations and changes in Group scope) is
+7.3%.
After two years of record growth, the more
challenging macro-economic environment led to a slowdown in line
with Group expectations. Capgemini growth in the second quarter was
therefore lower than in the first, reaching +5.2% at constant
exchange rates and +4.7% on an organic basis, despite a
particularly demanding comparison base (growth at constant exchange
rates of +19.3% in Q2 2022).
This performance is driven by good momentum in
Capgemini’s high added-value services, particularly in the area of
Intelligent Industry, as well as in activities driven by Cloud,
Data & Artificial Intelligence, which are the foundation of
Group clients’ major digital transformation projects.
Bookings totaled €11,968
million in the first half of 2023. Given the particularly demanding
comparison base, with growth of +22% in H1 2022, this represents an
increase of +4% at constant exchange rates. The book-to-bill ratio
is 1.05 for H1, reflecting ongoing robust commercial momentum.
The operating margin* is €1,413
million, or 12.4% of revenues, an increase of +9% or +20 basis
points year-on-year. In line with Group expectations, the shift in
the project mix, towards more innovative and value creating offers,
more than offset the higher operating cost base.
Other operating income and
expenses represent a net expense of €262 million, up €29
million year-on-year.
Capgemini’s operating profit is
therefore up +8% at €1,151 million, or 10.1% of revenues.
The net financial expense is
€22 million, down €49 million on H1 2022.
The income tax expense is €313
million. The effective tax rate is 27.8% in H1 2023, compared with
29.9% in H1 2022 (excluding tax expenses related to the impact of
the US tax reform2).
Taking into account the share of profits of
associates and non-controlling interests for -€7 million, the
Group share in net
profit is up +21% year-on-year at €809 million for
the first six months of 2023. Basic earnings per
share also rose by +20% year-on-year to €4.70.
Normalized earnings per share*
reached €5.80, compared with €4.87 in H1 2022 and €5.03 excluding
tax expenses related to the impact of the US tax reform.
Finally, as anticipated, organic free
cash flow* generation was negative for the first half of
2023, at -€53 million.
OPERATIONS BY REGION
The United Kingdom and Ireland
region (12% of Group revenues in H1 2023) reported robust growth of
+12.0% at constant exchange rates. This performance was mainly
driven by Public Sector and Manufacturing, Consumer Goods &
Retail and Financial Services sectors. Operating margin remains at
the same high level as in H1 2022, at 18.4%.
The Rest of Europe region (30%
of Group revenues) remained very dynamic, with growth of +11.4% at
constant exchange rates. This was mainly driven by Manufacturing
and Public Sector, while Financial Services, TMT (Telecoms, Media
and Technology) and Energy & Utilities continued to perform
well. Operating margin was up 70 basis points to reach 10.5%.
France (20% of Group revenues)
reported revenue growth of +9.2% at constant exchange rates driven
primarily by strong growth in Manufacturing, in addition to
continued growth in Financial Services, Consumer Goods
& Retail and Public Sector. Operating margin improved by
40 basis points year-on-year, to reach 11.1%.
Revenues in North America (29%
of Group revenues) reported a moderate growth of +3.0% at constant
exchange rates. The Manufacturing and Services sectors remained
buoyant. By contrast, the Financial Services sector reported
limited growth, while TMT and Consumer Goods & Retail sectors
contracted slightly. Operating margin was 15.2%, compared to 15.5%
in the first half of 2022.
Finally, revenues in Asia-Pacific and
Latin America region (9% of Group revenues) increased by
+4.8% at constant exchange rates. This growth was driven
exclusively by Asia-Pacific region's momentum - now essentially
organic - which was fueled by the Manufacturing, Consumer Goods
& Retail and Financial Services sectors. The region reported an
operating margin of 10.2%, up from 9.7% in H1 2022.
OPERATIONS BY
BUSINESS
Strategy & Transformation
services (8% of Group total revenues* in H1 2023) posted growth in
total revenues of +12.2% at constant exchange rates compared to H1
2022. This ongoing sustained momentum reflects the importance
placed by Group clients on the most strategic and value-creating
projects.
Applications & Technology
services (63% of Group revenues and Capgemini’s core business)
recorded solid growth in total revenues of +8.1% at constant
exchange rates.
Finally, Operations &
Engineering total revenues (29% of Group revenues) grew
+6.1% at constant exchange rates.
OPERATIONS IN Q2 2023
Capgemini’s performance in Q2 2023 was a
prolongation of the trends observed since the beginning of the
year, extending as expected the gradual slowdown that began in the
previous quarter. Group revenues totaled €5,697 million, up
+5.2% at constant exchange rates and +4.7% adjusted for Group scope
and exchange rate impacts.
Momentum remained robust in the United Kingdom
and Ireland and Rest of Europe regions in Q2, with constant
currency revenue growth of +10.2% and +9.0%, respectively,
underpinned by strong growth in Manufacturing and Public Sector.
Activity remained buoyant in France, with revenues up +6.2% also
supported by the dynamic Manufacturing sector. As in the previous
quarter, the deceleration in North America was stronger than at
Group level. Revenues in the region were stable at constant
exchange rates on Q2 2022, penalized by the contraction recorded in
Consumer Goods & Retail and TMT sectors, as well as a marked
slowdown in Financial Services. Finally, revenues in the
Asia-Pacific and Latin America region increased moderately by
+1.4%.
Bookings reached €6,101 million in the second
quarter. Given the particularly demanding comparison base, this
represents an increase of +1% at constant exchange rates. The
book-to-bill ratio of 1.07 is above last years’ average for a
Q2.
HEADCOUNT
At June 30, 2023, the Group’s total headcount
stood at 349,500, down slightly by -1% year-on-year. The “onshore”
workforce nonetheless grew by +3% to 148,300 employees, while the
“offshore” workforce contracted by -3% to 201,200 employees, i.e.,
58% of the total headcount.
BALANCE SHEET
Capgemini’s balance sheet structure was
relatively unchanged in H1 2023.
At June 30, 2023, the Group had cash and cash
equivalents and cash management assets of €3.8 billion. After
accounting for borrowings of €7.0 billion, Capgemini net debt*
stands at €3.2 billion at June 30, 2023, compared with €4.1 billion
at June 30, 2022 and €2.6 billion at December 31, 2022.
On the back of its solid cash position, the
Group redeemed in full and at maturity its €1.0 billion bond issued
in July 2015 after the H1 closing, on July 3, 2023.
OUTLOOK
The Group’s financial targets for 2023 are:
- Revenue growth of +4% to +7% at
constant currency;
- Operating margin of 13.0% to
13.2%;
- Organic free cash flow of around
€1.8 billion.
The inorganic contribution to growth should be
0.5 points at the lower end of the target range and
1.0 point at the upper end.
CONFERENCE CALL
Aiman Ezzat, Chief Executive Officer,
accompanied by Carole Ferrand, Chief Financial Officer, and Olivier
Sevillia, Chief Operating Officer, will present this press release
during a conference call in English to be held today at
8.00 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 posted on the Capgemini investor website at
https://investors.capgemini.com/en/.
PROVISIONAL CALENDAR
November 7,
2023 Q3 2023
revenuesFebruary 14,
2024 FY 2023
resultsApril 30,
2024 Q1 2024
revenuesMay 16,
2024 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 Universal 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
Capgemini is a global leader in partnering with
companies to transform and manage their business by harnessing the
power of technology. The Group is guided everyday by its purpose of
unleashing human energy through technology for an inclusive and
sustainable future. It is a responsible and diverse organization of
nearly 350,000 team members in more than 50 countries. With its
strong 55-year heritage and deep industry expertise, Capgemini is
trusted by its clients to address the entire breadth of their
business needs, from strategy and design to operations, fueled by
the fast evolving and innovative world of cloud, data, AI,
connectivity, software, digital engineering and platforms. The
Group reported 2022 global revenues of €22 billion.Get the Future
You Want | www.capgemini.com
* *
*
APPENDICES3
BUSINESS CLASSIFICATION
- Strategy &
Transformation includes all strategy, innovation and
transformation consulting services.
- Applications &
Technology brings together “Application Services” and
related activities and notably local technology services.
- Operations &
Engineering encompasses all other Group businesses. These
comprise Business Services (including Business Process Outsourcing
and transaction services), all Infrastructure and Cloud services,
and R&D and Engineering services.
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 |
Q1 2023 |
Q2 2023 |
H12023 |
Organic growth |
+10.1% |
+4.7% |
+7.3% |
Changes in Group scope |
+0.6 pts |
+0.5 pts |
+0.6 pts |
Growth at constant exchange rates |
+10.7% |
+5.2% |
+7.9% |
Exchange rate fluctuations |
+0.2 pts |
-2.0 pts |
-1.0 pt |
Reported growth |
+10.9% |
+3.2% |
+6.9% |
When determining activity trends by business and
in accordance with internal operating performance measures, growth
at constant exchange rates is calculated based on total
revenues, i.e., before elimination of inter-business
billing. The Group considers this to be more representative of
activity levels by business. As its businesses change, an
increasing number of contracts require a range of business
expertise for delivery, leading to a rise in inter-business
flows.
Operating margin is one of the
Group’s key performance indicators. It is defined as the difference
between revenues and operating costs. It is calculated before
“Other operating income and expense” which include amortization of
intangible assets recognized in business combinations, the charge
resulting from the deferred recognition of the fair value of shares
granted to employees (including social security contributions and
employer contributions), and non-recurring revenues and expenses,
notably impairment of goodwill, negative goodwill, capital gains or
losses on disposals of consolidated companies or businesses,
restructuring costs incurred under a detailed formal plan approved
by the Group’s Management, the cost of acquiring and integrating
companies acquired by the Group, including earn-outs comprising
conditions of presence, and the effects of curtailments,
settlements and transfers of defined benefit pension plans.
Normalized net profit is equal to profit for the
period (Group share) adjusted for the impact of items recognized in
“Other operating income and expense”, net of tax calculated using
the effective tax rate. Normalized earnings per
share is computed like basic earnings per share, i.e.
excluding dilution.
Organic free cash flow is equal
to cash flow from operations less acquisitions of property, plant,
equipment and intangible assets (net of disposals) and repayments
of lease liabilities, adjusted for cash out relating to the net
interest cost.
Net debt (or net cash
and cash equivalents) comprises (i) cash and cash
equivalents, as presented in the Consolidated Statement of Cash
Flows (consisting of short-term investments and cash at bank) less
bank overdrafts, (ii) cash management assets (assets presented
separately in the Consolidated Statement of Financial Position due
to their characteristics), less (iii) short- and long-term
borrowings. Account is also taken of (iv) the impact of hedging
instruments when these relate to borrowings, inter-company loans
and own shares.
RESULTS BY REGION
|
Revenues |
|
Year-on-year growth |
|
Operating margin rate |
|
H1 2023(in millions of euros) |
|
Reported |
At constant exchange rates |
|
H12022 |
H12023 |
North America |
3,288 |
|
+3.7% |
+3.0% |
|
15.5% |
15.2% |
United Kingdom and Ireland |
1,386 |
|
+7.7% |
+12.0% |
|
18.4% |
18.4% |
France |
2,308 |
|
+9.2% |
+9.2% |
|
10.7% |
11.1% |
Rest of Europe |
3,472 |
|
+9.8% |
+11.4% |
|
9.8% |
10.5% |
Asia-Pacific and Latin America |
972 |
|
+1.6% |
+4.8% |
|
9.7% |
10.2% |
TOTAL |
11,426 |
|
+6.9% |
+7.9% |
|
12.2% |
12.4% |
OPERATIONS BY BUSINESS
|
Total revenues |
|
Year-on-year growth |
|
H1 2023(% of Group revenues) |
|
At constant exchange ratesin Total
revenuesof the business |
Strategy & Transformation |
8% |
|
+12.2% |
Applications & Technology |
63% |
|
+8.1% |
Operations & Engineering |
29% |
|
+6.1% |
SUMMARY INCOME STATEMENT AND OPERATING
MARGIN
(in millions of euros) |
H12022 |
H12023 |
Change |
Revenues |
10,688 |
11,426 |
+6.9% |
Operating expenses |
(9,387) |
(10,013) |
|
Operating margin |
1,301 |
1,413 |
+9% |
as a % of revenues |
12.2% |
12.4% |
|
Other operating income and expense |
(233) |
(262) |
|
Operating profit |
1,068 |
1,151 |
+8% |
as a % of revenues |
10.0% |
10.1% |
|
Net financial expense |
(71) |
(22) |
|
Income tax income/(expense) |
(327) |
(313) |
|
(-) Non-controlling interests and share of profit of
associates |
(3) |
(7) |
|
Net profit (Group share) |
667 |
809 |
+21% |
NORMALIZED AND DILUTED EARNINGS PER
SHARE
(in millions of euros) |
H12022 |
H12023 |
Change |
Average number of shares outstanding |
170,561,706 |
171,947,414 |
|
BASIC EARNINGS PER SHARE (in
euros) |
3.91 |
4.70 |
+20% |
Diluted average number of shares outstanding |
176,218,421 |
178,089,362 |
|
DILUTED EARNINGS PER SHARE (in
euros) |
3.78 |
4.54 |
+20% |
|
|
|
|
(in millions of euros) |
H12022 |
H12023 |
Change |
Net profit (Group share) |
667 |
809 |
+21% |
Effective tax rate, excluding exceptional tax expenses |
29.9% |
27.8% |
|
(-) Other operating income and expenses, net of tax |
163 |
189 |
|
Normalized profit for the period |
830 |
998 |
|
Average number of shares outstanding |
170,561,706 |
171,947,414 |
|
NORMALIZED EARNINGS PER SHARE (in euros) |
4.87 |
5.80 |
+19% |
In H1 2022, the Group recorded tax expenses of
€29 million related to the impact of the US tax reform and which,
taking into account the average number of shares outstanding,
represented an amount of €0.16 per share. Adjusted for these tax
expenses, normalized earnings per share were therefore €5.03.
CHANGE IN CASH AND CASH EQUIVALENTS AND
ORGANIC FREE CASH FLOW
(in millions of euros) |
H12022 |
H12023 |
Net cash from operating activities |
569 |
244 |
Acquisitions of property, plant and equipment and intangible
assets, net of disposals |
(145) |
(125) |
Net interest cost |
(74) |
(24) |
Repayments of lease liabilities |
(157) |
(148) |
ORGANIC FREE CASH FLOW |
193 |
(53) |
Other cash flows from (used in) investing and financing
activities |
(964) |
(481) |
Increase (decrease) in cash and cash
equivalents |
(771) |
(534) |
Effect of exchange rate fluctuations |
25 |
(70) |
Opening cash and cash equivalents, net of bank
overdrafts |
3,119 |
3,795 |
Closing cash and cash equivalents, net of bank
overdrafts |
2,373 |
3,191 |
NET DEBT
(in millions of euros) |
June 30, 2022 |
December 31, 2022 |
June 30, 2023 |
Cash and cash equivalents |
2,403 |
3,802 |
3,195 |
Bank overdrafts |
(30) |
(7) |
(4) |
Cash and cash equivalents, net of bank
overdrafts |
2,373 |
3,795 |
3 ,191 |
Cash management assets |
415 |
386 |
575 |
Long-term borrowings |
(6,649) |
(5,655) |
(5,663) |
Short-term borrowings and bank overdrafts |
(200) |
(1,102) |
(1,339) |
(-) Bank overdrafts |
30 |
7 |
4 |
Borrowings, excluding bank overdrafts |
(6,819) |
(6,750) |
(6,998) |
Derivative instruments |
(63) |
3 |
(12) |
NET CASH / (NET DEBT) |
(4,094) |
(2,566) |
(3,244) |
1 Limited review procedures on the interim
consolidated financial statements have been completed. The auditors
are in the process of issuing their report.2 Up to 29 million euros
in H1 2022 and 73 million euros for the full year 2022.3 Note that
in the appendix, certain totals may not equal the sum of amounts
due to rounding adjustments.
- Capgemini_-_2023-07-28_-_H1_2023_Results
- Capgemini_H12023_infographics_ENG_final
- Capgemini_Q22023_infographics_ENG_final
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