Capgemini Press Release // Q1 2020 revenue growth of +2.3%
Good morning,
Please find below the press release issued today at 7.00am CET,
before the opening of Paris Stock Exchange.
Best regards,
Florence LièvreGlobal PR Manager | Group
Marketing & Communications
Capgemini Group | ParisTel.: +33 1 47 54 50 71Email :
florence.lievre@capgemini.com_____________________
Media relations:Florence
LièvreTel.: +33 1 47 54 50 71florence.lievre@capgemini.com
Investor relations:Vincent
BiraudTel.: +33 1 47 54 50 87vincent.biraud@capgemini.com
Q1 2020 revenue growth
of +2.3%
- Q1 growth in line with expectations despite the
COVID-19 pandemic
- Completion of the Altran acquisition and its
refinancing on the bond market
- Proposed dividend trimmed from €1.90 to €1.35 per
share
Paris, April 28, 2020 –
Capgemini Group posted consolidated revenues of €3,547 million in
the first quarter of 2020, up 2.3% year-on-year at constant
exchange rates*.
Paul Hermelin, Chairman and Chief Executive
Officer of Capgemini Group and Aiman Ezzat, who will become Chief
Executive Officer of the Group following the Shareholders’ Meeting
of May 20, 2020, commented: "In the unprecedented situation that we
are currently navigating, the Group’s priority is the health and
safety of our employees and the continuity of the services
Capgemini provides to its clients. Above all, we would like to
thank all Group team members for their strong mobilization. Thanks
to their commitment and the swift implementation of our business
continuity plan with, in particular, close to 95% of employees
working from home, we were immediately able to offer our clients
services tailored not only to their short-term challenges but also
to their future environment. This is reflected in the quality of
our first quarter growth performance.
This quarter is also marked by the completion of
the Altran acquisition. It is a key moment in our history and opens
up great prospects, as we firmly believe that innovation, spurred
by connected devices and 5G, will continue to drive
demand.
In this new environment, the Group expects the
2nd quarter to be challenging, before a gradual recovery in the 3rd
and 4th quarters. It can confidently rely on the higher resilience
of its business model and sustained demand for digital and cloud
services, as innovative technology becomes even more prevalent in
our world.
However, considering the level of uncertainty,
specifically the speed of demand recovery exiting the lockdown,
Capgemini is not in position to commit to an outlook for 2020 at
this stage. Finally, we would like to share the pride we take in
our teams working on many solidarity initiatives with creativity
and generosity."
|
Revenues(in millions of euros) |
|
Change |
|
2019 |
2020 |
|
At current exchange rates |
At constant exchange rates* |
Q1 |
3,441 |
3,547 |
|
+3.1% |
+2.3% |
Q1 revenues totaled €3,547 million, up 3.1%
year-on-year. Growth at constant exchange rates* was 2.3%, with
currency impacts mainly tied to the appreciation of the US dollar
against the euro. Organic growth* (i.e. excluding the impact of
currency fluctuations and changes in scope) was 2.0%. Digital and
Cloud revenues continued to grow rapidly (approximately 20% at
constant exchange rates) to account for over 50% of Group
revenues.
OPERATIONS BY REGION
As anticipated, regional trends were generally
in line with Q4 2019.
North America revenues (32% of
Group revenues) slipped slightly as expected, -0.6% at constant
exchange rates compared to Q1 2019. Manufacturing and Energy &
Utilities sectors weighed down, but Financial Services recorded a
slight growth.
The United Kingdom
& Ireland region (12% of Group revenues)
reported a more modest contraction than in the previous quarter,
decreasing 2.6% at constant exchange rates. Financial Services was
the main contributor to this trend, while the Manufacturing sector
was particularly buoyant.
France (21% of Group revenues)
continued its growth trajectory, with revenues increasing 3.3%
driven mainly driven by the Public Sector and Services.
Rest of Europe (28% of Group
revenues) recorded another robust quarter, with a 5.1% increase in
revenues at constant exchange rates. Activity was particularly
strong in the Manufacturing and Consumer Goods & Retail
sectors.
Finally, the Asia-Pacific and Latin
America region (7% of Group revenues) maintained a
double-digit growth rate. Revenues grew 11.2% at constant exchange
rates, primarily boosted by the Financial Services, Consumer Goods
& Retail and Energy & Utilities sectors.
OPERATIONS BY
BUSINESS
Strategy & Transformation
consulting services (7% of Group revenues), grouped under Capgemini
Invent, recorded sustained growth of 9.6% at constant exchange
rates in total revenues* compared to the same period last year.
With no major acquisitions during the period, this growth mainly
reflects strong demand from Group customers to support their
digital transformation. Unsurprisingly, growth was stronger in the
first two months of the year.
Applications & Technology
services (71% of Group revenues), the Group's core business,
reported total revenue growth of 2.1% at constant exchange
rates.
Finally, Operations & Engineering
Services (22% of Group revenues) reported a 3.5% increase
in total revenues at constant exchange rates, driven primarily by
Cloud Infrastructure Services.
HEADCOUNT
At March 31, 2020, the Group’s total headcount
stood at 219,100, up 2.9% year-on-year, with a 2.4% increase in
employees in offshore centers to 124,900 (57% of the total
headcount).
BOOKINGS
Bookings totaled €3,403 million in Q1 2020, a
0.8% increase at constant exchange rates following a strong
progression in 2019 (+11% for the full year).
SUCCESSFUL ACQUISITION OF ALTRAN
TECHNOLOGIES
As announced on April 2, 2020, Capgemini
implemented a squeeze-out on the remaining Altran shares not yet
held after its successful friendly tender offer closed on March 30,
2020. Following this procedure, Capgemini holds the entire share
capital and voting rights of Altran Technologies and the Altran
shares were delisted after the market closed on April 15, 2020.
Altran group is fully consolidated in the Capgemini consolidation
scope from April 1, 2020.
The Group has now gained access to all cost and
operating model synergies. Cost and operating model synergies are
anticipated to reach an annual pre-tax run rate between €70 and
€100 million in 3 years. At that point in time, commercial
synergies should generate between €200 million and €350 million in
additional annual revenues, from cross-selling and the development
of innovative sectorial offers.
In line with the financing strategy previously
announced, Capgemini performed, on April 8, 2020, a €3.5 billion
multi-tranche bond issue primarily to refinance the bridge loan in
place. This bond offering was a great success with an
oversubscription of about 4.5 times. This transaction also extended
the average maturity of the Group’s debt by 2.5 years,
bringing it to over 6 years. These bonds are rated BBB by Standard
& Poor's, in line with the BBB/stable outlook rating recently
assigned to Capgemini.
IMPACT OF COVID-19
In this unprecedented context of the global
coronavirus pandemic, Capgemini’s priority is the health and safety
of its employees and the continuity of services to its clients.
The Group therefore set up prevention and
protection measures even before lockdown decisions were made, and
is constantly monitoring the decisions and recommendations of local
public authorities for their implementation. Through proper
planning and timely execution, leveraging its internal investment
in technology, Capgemini was among the fastest in the industry to
massively deploy work-from-home (close to 95% of productive
headcount as of today) across its activities worldwide.
Furthermore, the Group quickly implemented the
business continuity plans for its clients, that were prepared well
in advance. The Group has demonstrated its agility by being able to
quickly offer new services to help its customers adapt their
operations to this new environment.
OUTLOOK
The Group is in a position, particularly thanks
to its digital capabilities, to provide all the services requested
by its customers. It has already organized its operations for the
phasing out of lockdown in certain countries and intends to take
advantage of the new opportunities that will emerge.
However, as the uncertainties surrounding the
development of the health crisis linked to the COVID-19 pandemic
remain significant, the Group is not in a position to commit to an
outlook for 2020 at this stage.
Beyond the strength of its financial structure,
the Group has substantially improved the resilience of its
operations since the financial crisis of 2009. Capgemini is
confident on its ability to demonstrate its resilience thanks to
:
- an active management of the cost base, using all available
levers;
- a flexible operating model, based on an agile and decentralized
delivery model and a large offshore base;
- a diversified client base, both by sector and region, which
contributes on average to 95% of the following year’s
revenues;
- a portfolio of offers well suited to the current context, with
sustained digital and cloud demand and dedicated offers to help its
customers cope with this crisis.
SOLIDARITY MEASURES IN THE CONTEXT OF
THE COVID-19 CRISIS
In view of this unique situation and the strict
cost containment actions put in place, Capgemini has also taken
several decisions aimed at building solidarity between the various
stakeholders.
On April 27, 2020, the Board of Directors
decided to reduce by 29% the dividend proposed for approval at the
next Shareholders’ Meeting, from €1.90 to €1.35 per share.
Furthermore, Paul Hermelin and Aiman Ezzat have
decided to go beyond the AFEP recommendations by taking two
decisions regarding their compensation. They each forgo 25% of
their 2020 total compensation as executive directors. In addition,
during the period of implementation of partial unemployment in
France, their unpaid compensation as executive directors will be
transferred to the “Institut Pasteur” to finance research
initiatives on COVID-19. These measures were approved by the
Capgemini Board of Directors. Significant efforts have also been
requested from all the Group's senior executives with respect to
their variable compensation.
Capgemini announced on April 24, 2020 the
creation of a "social response unit" aimed at accelerating and
amplifying the numerous initiatives already launched by the Group
and its employees. The unit is initially focusing on the most
urgent needs in terms of public health. It is also working on
longer-term projects aimed at developing solutions to address the
economic and social impacts on society in the aftermath of the
pandemic.
CONFERENCE CALL
Paul Hermelin, Chairman and Chief Executive
Officer, Aiman Ezzat, Chief Operating Officer and Carole Ferrand,
Chief Financial 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 placed online on the Capgemini investor website at
https://investors.capgemini.com/en/ .
CALENDAR
May 20,
2020
Shareholders’ Meeting behind closed doors (see press release
of April 27, 2020, for practical details)September 3, 2020
Publication of H1 2020 results
DIVIDEND
The Board of Directors is now proposing to the
Shareholders’ Meeting the payment of a dividend of €1.35 per share,
instead of the €1.90 previously announced.
The payment schedule for the dividend is as
follows:June 3,
2020
Ex-dividend date on Euronext ParisJune 5,
2020
Payment of the dividend
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
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 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 270,000 team members in
nearly 50 countries. With Altran, the Group reported 2019 combined
global revenues of €17 billion.Visit us at www.capgemini.com.
People matter, results count.
*
*
*
APPENDIX1
BUSINESS CLASSIFICATION
- Strategy & Transformation includes all
strategy and transformation consulting services and corresponds to
the Capgemini Invent scope;
- Applications & Technology brings together
“Application Services” and related activities and notably local
technology services previously included in “Technology &
Engineering Services”;
- Operations & Engineering encompasses all
other Group businesses. These comprise: Business Services
(including Business Process Outsourcing), all Infrastructure
Services (including those previously in “Technology &
Engineering Services”) and Digital Engineering and Digital
Manufacturing services (previously in “Technology & 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 Group growth rates |
Q1 2020 |
Organic growth |
+2.0% |
Changes in Group scope |
+0.3pt |
Growth at constant exchange rates |
+2.3% |
Exchange rate fluctuations |
+0.8pt |
Reported growth |
+3.1% |
When determining activity trends by business and
in accordance with internal operating performance measures, growth
at constant exchange rates is calculated based on total
revenue, 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
(currently approximately 7% of total revenues).
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 expenses” 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
year (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.
RESULTS BY REGION
|
Revenues(in millions of euros) |
|
Change |
|
|
Q1 2019 |
Q1 2020 |
|
At current exchange rates |
At constant exchange rates |
|
North America |
1,107 |
1,133 |
|
+2.3% |
-0.6% |
|
United Kingdom and Ireland |
416 |
410 |
|
-1.4% |
-2.6% |
|
France |
732 |
755 |
|
+3.3% |
+3.3% |
|
Rest of Europe |
938 |
980 |
|
+4.5% |
+5.1% |
|
Asia-Pacific and Latin America |
249 |
269 |
|
+8.1% |
+11.2% |
|
TOTAL |
3,441 |
3,547 |
|
+3.1% |
+2.3% |
|
RESULTS BY BUSINESS
|
Total revenues* (% of Group
revenues) |
|
Changeat constant exchange
ratesin Total revenues*of the
business |
|
Q1 2019 |
Q1 2020 |
|
Strategy & Transformation |
7% |
7% |
|
+9.6% |
Applications & Technology |
71% |
71% |
|
+2.1% |
Operations & Engineering |
22% |
22% |
|
+3.5% |
UTILIZATION RATES
|
Q1 2019 |
Q2 2019 |
Q3 2019 |
Q4 2019 |
Q1 2020 |
Strategy & Transformation |
70% |
72% |
70% |
72% |
69% |
Applications & Technology |
78% |
79% |
79% |
80% |
78% |
_____________________________
* The terms and Alternative Performance Measures
marked with an (*) are defined and/or reconciled in the appendix to
this press release.1 Note that in the appendix, certain totals may
not equal the sum of amounts due to rounding adjustments.
- Capgemini_-_2020-04-28_-_Q1_2020_Revenues
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