Capgemini Press Release// Marked recovery in activity in Q3 2020
Media relations:Florence
LièvreTel.: +33 1 47 54 50 71E-mail:
florence.lievre@capgemini.com
Investor relations:Vincent
BiraudTel.: +33 1 47 54 50 87E-mail:
vincent.biraud@capgemini.com
Marked recovery in activity in Q3
2020
- Revenues of €4,008 million, up +18.4% at constant
currency* and down -3.6% organically*
- More than 10% growth in Digital and Cloud which now
account for over 60% of Group activity1
- Strong bookings of €3,896 million
Paris, October 27, 2020 -
Capgemini Group achieved consolidated revenues of €4,008 million in
Q3 2020, up 15.6% year-on-year at current exchange rates and 18.4%
year-on-year at constant exchange rates*.
Aiman Ezzat, Chief Executive Officer of
Capgemini Group, said: “The quarter, which came in better than
expected, brought a significant performance improvement over Q2
across all our regions and businesses. Digital and Cloud continues
to expand, up more than 10% year-on-year, and bookings remain
strong. We expect Q4 to confirm this favorable trend and record a
further but limited improvement, due to recent developments in the
health situation. In this framework, our performance for 2020
should exceed the mid-point of the range announced, both for growth
and operating margin, and we remain confident in the prospects for
further improvement in 2021.
In addition, Altran integration is developing as
planned. A 5G & Edge offering was launched, the first of a
series of Intelligent Industry offerings.
Finally, the quarter was marked by the adoption
of the Group’s Purpose: “Unleashing human energy through technology
for an inclusive and sustainable future.” Developed in
collaboration with all of the Group’s stakeholders, this Purpose is
founded on our belief that technological innovation should benefit
all of humanity”.
|
(in millions of euros) |
|
Change |
Revenues |
2019 |
2020 |
|
At current exchange rates |
At constant exchange rates* |
Q3 |
3,468 |
4,008 |
|
+15.6% |
+18.4% |
9 months |
10,475 |
11,589 |
|
+10.6% |
+11.3% |
The Group’s Q3 performance improved
significantly on Q2, both for growth at constant exchange rates*
and organic* growth. As in the previous quarter, Capgemini
benefited fully in Q3 from the consolidation of Altran Technologies
(“Altran”) in the Group scope.
With Q3 2020 revenues of €4,008 million, growth
at constant exchange rates was +18.4% year-on-year, a considerable
improvement on Q2 growth of +13.4%.
The improvement in organic performance (i.e.
adjusted for the impacts of currency fluctuations and changes in
Group scope) was also substantial, with Q3 revenues contracting
only -3.6% year-on-year, compared with -7.7% in Q2.
All Group businesses and regions contributed to
this improvement. It also reflects demand, which accelerated once
again in Digital and Cloud
services. With growth of more than 10%, these activities accounted
for over 60% of the Group’s activity in Q3 20201.
For the first nine months of the year, Capgemini
growth reached +10.6% on a reported basis and +11.3% at constant
exchange rates. Group organic growth saw a limited decline of
-3.5%. In the face of the Covid-19 crisis, this demonstrates the
resilience of Capgemini’s revenues, strengthened in recent years by
the sector and geographic diversification of the Group's client
base and the development of a portfolio of innovative
offerings.
RESULTS BY REGION
|
|
Change in revenues vs. 2019 at constant exchange
rates |
|
|
|
Q1 2020 |
Q2 2020 |
Q3 2020 |
North America |
|
-0.6% |
+9.0% |
+10.0% |
United Kingdom and Ireland |
|
-2.6% |
+3.7% |
+9.1% |
France |
|
+3.3% |
+11.8% |
+20.1% |
Rest of Europe |
|
+5.1% |
+24.9% |
+32.7% |
Asia-Pacific and Latin America |
|
+11.2% |
+11.7% |
+14.0% |
TOTAL |
|
+2.3% |
+13.4% |
+18.4% |
The robust Q3 performance was fueled by stronger
year-on-year growth rates across all Group regions compared to
those of Q2. These higher regional constant currency growth rates,
presented in the above table, directly reflect greater underlying
organic momentum (i.e. at constant scope and exchange rates).
In Q3 2020, the Rest of Europe
region (30% of Group revenues in Q3 2020) reported a return to
organic growth year-on-year. Momentum also strengthened in
North America (31% of Group revenues) and the
United Kingdom and Ireland (11% of Group
revenues), despite these regions reporting an organic decline on Q3
2019. While France (21% of Group revenues)
continues to report the largest organic contraction, the situation
improved significantly on the previous quarter. Finally, the
Asia-Pacific and Latin America region (7% of Group
revenues) accelerated further in Q3 and remained the Group’s most
dynamic region.
While sector performance remained highly
contrasted in Q3, due to major differences in the pandemic’s
impact, all sectors improved on Q2. Accordingly, on an organic
basis: the public sector (13% of Group revenues in Q3 2020)
accelerated further in Q3. Financial Services (the largest sector
generating 25% of Group revenues) returned to growth in the
quarter. The TMT sector (13% of Group revenues) also significantly
boosted its momentum, but contracted slightly during the period.
The Q3 decline reported by the Consumer Goods & Retail (11% of
Group revenues) and Energy & Utilities (10% of Group revenues)
sectors improved marginally on Q2. Finally, the Manufacturing
sector (23% of Group revenues and also including the Life Sciences
sector) and the Services sector (5% of Group revenues and includes
transportation services, hospitality and catering), which were the
hardest hit by the crisis in Q2, reported a marked improvement,
contracting significantly less in Q3.
RESULTS BY BUSINESS
|
|
Change in total revenues*
vs. 2019 at constant exchange rates |
|
|
Q1 2020 |
Q2 2020 |
Q3 2020 |
|
Strategy & Transformation |
|
+9.6% |
+7.6% |
+13.5% |
|
Applications & Technology |
|
+2.1% |
-4.5% |
+0.3% |
|
Operations & Engineering |
|
+3.5% |
+69.4% |
+70.4% |
|
In Q3, annual growth rates improved compared to
Q2 levels in each of the Group’s businesses, both at constant
exchange rates (see table above) and organically, that is at
constant scope and exchange rates.
Accordingly, on an organic basis:
Strategy & Transformation consulting services
(6% of Group revenues in Q3 2020) reported a smaller decline in
total revenues*, but remain, unsurprisingly, the hardest hit by the
crisis. Applications &
Technology services (61% of Group revenues), the
Group’s core business, rallied significantly, but is still slightly
down year-on-year. Operations &
Engineering services (33% of Group revenues) also
reported improved momentum, driven by stronger growth in Cloud
infrastructure services and a slight improvement in the performance
of Engineering services.
At constant exchange rates, total revenue growth
for Operations & Engineering services mainly
reflects the consolidation of Altran, which primarily delivers
Engineering services. Altran’s consolidation had a far more limited
impact on the other business lines.
HEADCOUNT
At September 30, 2020, the Group’s total
headcount stood at 264,600, up 20.6% year-on-year, mainly following
the integration of 50,000 Altran team members. Over 140,000
employees work in offshore centers, i.e. 53% of the total
headcount.
BOOKINGS
Bookings totaled €3,896 million in Q3 2020, a
17.4% year-on-year increase at constant exchange rates. The
book-to-bill ratio is 97%, largely stable year-on-year, but eight
points above the five-year Q3 average. This reflects a high level
of client demand and is encouraging for the coming quarters.
OUTLOOK
On the publication of its H1 2020 results, the
Group set the following objectives for 2020 as a whole:
- Revenue growth at constant exchange rates of between +12.5% and
+14.0%, with an estimated contribution from acquisitions of
17.0%;
- An operating margin reduction of 0.6 to 0.9 points compared
with the 2019 rate of 12.3%, illustrating a clear improvement in
our resilience;
- Organic free cash flow above €900 million.
CONFERENCE CALL
Aiman Ezzat, Chief Executive 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/financial-results/.
PROVISIONAL CALENDAR
February 17, 2021 FY
2020 resultsApril 29, 2021
Q1 2021
revenues May 20, 2021
Combined 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 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. A responsible and multicultural
company of 265,000 people in nearly 50 countries, Capgemini’s
purpose is to unleash human energy through technology for an
inclusive and sustainable future. With Altran, the Group reported
2019 combined global revenues of €17 billion.
Visit us at www.capgemini.com.
*
*
*
APPENDIX2
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 |
Q3 2020 |
9 months 2020 |
|
|
Organic growth |
-3.6% |
-3.5% |
|
Changes in Group scope |
+22.0 pts |
+14.8 pts |
|
Growth at constant exchange rates |
+18.4% |
+11.3% |
|
Exchange rate fluctuations |
-2.8 pts |
-0.7 pts |
|
Reported growth |
+15.6% |
+10.6% |
|
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 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.
COVID-19: The impact of the
health crisis on the Group’s consolidated financial statements is
not isolated. The definition of the above alternative performance
measures is therefore unchanged and, in accordance with past
practice, these financial statements include in other operating
income and expenses a non-material amount of incremental and
non-recurring costs related to this crisis.
RESULTS BY REGION
|
Revenues (in € millions) |
|
Change |
|
Q3 2019 |
Q3 2020 |
|
Reported |
At constant exchange rates |
North America |
1,164 |
1,218 |
|
+4.6% |
+10.0% |
United Kingdom and Ireland |
407 |
443 |
|
+8.7% |
+9.1% |
France |
702 |
842 |
|
+20.0% |
+20.1% |
Rest of Europe |
913 |
1,212 |
|
+32.8% |
+32.7% |
Asia Pacific and Latin America |
282 |
293 |
|
+3.8% |
+14.0% |
TOTAL |
3,468 |
4,008 |
|
+15.6% |
+18.4% |
|
Revenues (in € millions) |
|
Change |
|
9 months 2019 |
9 months 2020 |
|
Reported |
At constant exchange rates |
North America |
3,412 |
3,618 |
|
+6.0% |
+6.1% |
United Kingdom and Ireland |
1,256 |
1,296 |
|
+3.2% |
+3.3% |
France |
2,200 |
2,454 |
|
+11.6% |
+11.6% |
Rest of Europe |
2,811 |
3,384 |
|
+20.4% |
+20.9% |
Asia Pacific and Latin America |
796 |
837 |
|
+5.1% |
+12.3% |
TOTAL |
10,475 |
11,589 |
|
+10.6% |
+11.3% |
RESULTS BY BUSINESS
|
Total revenues* (% of Group revenues) |
Change at constant exchange rates in total revenues* of the
business |
|
Q3 2020 |
Strategy & Transformation |
6% |
+13.5% |
Applications & Technology |
61% |
+0.3% |
Operations & Engineering |
33% |
+70.4% |
|
Total revenues* (% of Group
revenues) |
Change at constant exchange rates in total revenues* of the
business |
|
9 months 2020 |
Strategy & Transformation |
7% |
+10.2% |
Applications & Technology |
63% |
-0.7% |
Operations & Engineering |
30% |
+48.4% |
* The terms and Alternative Performance Measures marked with an
(*) are defined and/or reconciled in the appendix to this press
release.
1 Figures for the Group scope excluding Altran.
Growth is calculated at constant exchange rates.2 Note that in the
appendix, certain totals may not equal the sum of amounts due to
rounding adjustments.
- Capgemini_-_2020-10-27_-_2020_Q3_Revenues
- 2020_10_27_Capgemini_ YTD_2020_Infographics
- 2020_10_27_Capgemini_Q3_2020_Performance_Infographics
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