Industry Summary Articles

The Board of Directors of Capgemini SE, chaired by Paul Hermelin, convened on July 29, 2019, to review and authorize the issue of the accounts[1] of Capgemini Group for the 1st half of 2019.

Paul Hermelin, Chairman and Chief Executive Officer of Capgemini Group, comments:  “We are demonstrating our ability to deliver continuously a strong increase in earnings, with growth in both revenue and profitability. Momentum remains strong in Europe, where we generate 60% of our revenues, with a remarkable performance in France and the United Kingdom. Digital and Cloud continue to develop at a rapid pace, and for the first time, represent half of our revenues. These excellent results demonstrate the relevance and strength of our strategy.

The first six months also saw the announcement of the proposed friendly takeover of Altran, a major strategic move for both our companies. We complement each other and with the cultural proximity we will create a world leader in digital transformation for industrial companies,  what we call the ‘intelligent industry’.”

1ST HALF KEY FIGURES

The Group generated revenues of €7,007 million in H1 2019, up 8.4% on H1 2018 reported revenues and 6.2% at constant exchange rates*. Organic growth* (i.e. excluding the impact of currency fluctuations and changes in Group scope) was 4.9%.

Group momentum continues to be supported by Digital & Cloud activities, which grew around 20% at constant exchange rates in the first half. They now account for around 50% of Group revenues.

Group growth reached 5.7% at constant exchange rates and 4.7% organically in the second quarter.

Bookings totaled €7,101 million in the first six months of 2019, a 4.8% increase at constant exchange rates year-on-year.

The operating margin* is €797 million, or 11.4% of revenues, an increase of 13% or 50 basis points year-on-year. This robust performance reflects the higher gross margin, which has increased at the same rate thanks to the success of innovation offerings. It illustrates the Group’s ability to balance growth and higher profitability.

Other operating income and expenses represent a net expense of €139 million. The €47 million improvement year-on-year is mainly due to a reduction in restructuring costs.

Operating profit rose 26% to €658 million, or 9.4% of revenues.

The net financial expense is stable year-on-year at €39 million. The income tax expense is €232 million and includes €30 million due to the transitional impact of tax reforms in the United States, compared with €18 million last year. Adjusted for these expenses, the effective tax rate is 32.6%, compared with 31.4% in H1 2018 and 33.7% in FY 2018.

Net profit (Group share) increases 23% year-on-year to €388 million for the first six months of the year. Basic EPS (earnings per share) is up 24% year-on-year at €2.34. Normalized EPS* is up 10% to €2.90. Normalized EPS adjusted for the transitional tax expense is up 12% to €3.08.

The Group generated organic free cash flow* of €90 million in the half-year, compared with €11 million in the previous year period.

Returns to shareholders amounted to €431 million in H1 2019, with a dividend payment of €281 million and share buybacks totaling €150 million (excluding the liquidity contract). In addition, bolt-on acquisitions resulted in a net cash outflow of €152 million over the period.

OUTLOOK

For 2019, the Group targets revenue growth at constant exchange rates of 5.5% to 8.0%, improved profitability with an operating margin of 12.3% to 12.6% and stronger organic free cash flow – on a comparable basis – of over €1.1 billion.

This outlook takes into account the impact of the application of IFRS 16 from January 1, 2019 on the operating margin (around +5 basis points) and on the organic free cash flow definition (around -€50 million), as detailed in the appendix to the press release publishing this outlook, issued on February 14, 2019.

To view the original press release, and full results including operations by region, please click here.

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