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Thursday 13 February 2020

Growth slows but bookings surge for Capgemini

LogoAs we expected (see here), Capgemini experienced a slower Q419. Constant currency sales for the three months ended 31st December increased by just 2.9% yoy to €3.65b, suppressed by weakening demand in both North America and the Financial Services sector. This brought full year top line yoy growth down to 5.3% delivering 2019 revenues of €14.13b - a very respectable performance, albeit below the guidance issued last October. Operating margin improved by 20 bps against FY18 to 12.3%.

Better news came in the shape of bookings. The company saw Q4 order intake jump by over 16% yoy to €4.6b. This surge was underpinned by both the Bayer megadeal signed in December and continuing strong demand for digital and cloud services. The latter now account for over 50% of Capgemini’s global turnover. There was good progress too made by Capgemini Invent - the company’s consulting, digital innovation and transformation unit - whose revenues increased by over 15% last year.

Closer to home the position is less encouraging. Having posted top line improvement on 6.3% in Q3, Capgemini UK & Ireland reported a 3.1% yoy decline in sales for the final quarter of the year to bring FY19 growth in the region down to 4.7%. A “wait-and-see market”, fuelled by the December general election and the impending Brexit date, was cited as the culprit. Despite a flurry of recent large wins with the likes of Barts Health NHS Trust and the Nuclear Decommissioning Authority, the company expects the softness in this geography to continue through Q120. A return to growth not anticipated here until the second half of this year. A number of Capgemini’s competitors will be posting their 2019 results over the next few weeks. It will be interesting to see if they paint a similar picture of the UK SI market.

Posted by: Duncan Aitchison

Tags: results   systemsintegration   itservices  

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