Capgemini Group achieved consolidated revenues of €3,171 million in the first quarter of 2017, up 2.8% year-on-year at constant exchange rates.
For Paul Hermelin, Chairman and Chief Executive Officer of Capgemini Group: “We start the year on a solid footing. Our revenue growth of 2.8% in Q1 is driven by a strong momentum in Continental Europe and an improved performance in North America. Financial Services and Manufacturing – which together account for nearly half of the Group’s revenues – show growth rates close to 10%. This reflects our ability to support key market players in their digital transformation. In addition, a strong level of bookings confirms the good start to the year.
Digital and Cloud grew 24% year-on-year and now account for 32% of our revenues. We completed three focused acquisitions this quarter, aimed at further expanding our portfolio in these areas and bringing innovative and end-to-end digital solutions to our clients: Idean, a digital design firm based in Palo Alto, Atlanta-based TCube Solutions, specialized in Duck Creek Technologies insurance software and Itelios, an omni-channel e-commerce expert.
We are also investing in our automation platforms and our global production centers to accompany our clients in their drive to improve competitiveness.
By continuing to implement our strategic priorities, we demonstrate our ability to achieve all our objectives for 2017, the year of Capgemini’s 50th anniversary.”
| (In millions of euros) | Change | |||||
| Q1 2016 | Q1 2017 | As reported | At constant exchange rates* | At constant exchange rates and Group scope* | ||
| Revenues | 3,092 | 3,171 | +2.6% | +2.8% | +2.6% | |
Q1 revenues totaled €3,171 million, up 2.6% year-on-year on a reported basis. At constant exchange rates, revenue grew 2.8% after adjusting for the Brazilian equipment resale business which is being discontinued.
OPERATIONS BY BUSINESS
Consulting Services (4% of Group revenues), driven by growth in Continental Europe and fueled by digital transformation demand, reported year-on-year revenue growth of 10.6% at constant exchange rates. Technology & Engineering Services (16% of Group revenues) grew 5.0% at constant exchange rates, progressing across all Group regions, with a return to growth in France amplified by the positive impact of the number of working days this quarter. Application Services (61% of Group revenues) benefitted from a strong market demand for digital and cloud-based application offerings and continue to drive Group momentum, with revenue growth of 5.3%. Other Managed Services (19% of Group revenues) reported revenues down by 7.6%. This is entirely attributable to Infrastructure Services which continue to be impacted by the anticipated decline in the UK public sector. Business Services (Business Process Outsourcing and platforms) are stable in Q1.
OPERATIONS BY MAJOR REGION
In Q1, as planned, North America began to restore its growth momentum, with revenues almost stable year-on-year, at -0.2% at constant exchange rates, a marked improvement on the -3.1% reported in Q4 2016. In this region, the Energy & Utilities sector confirmed its path to recovery, with a third quarter of sequential revenue stability, while the Financial Services sector enjoyed good momentum and the Manufacturing sector strengthened. The United Kingdom and Ireland reported a revenue decline of 7.6% at constant exchange rates, reflecting the anticipated decline in the public sector while private sector remains healthy. France grew 5.2%, with almost 10% increase in Financial Services and Manufacturing, as well as in the consumer sectors (Commerce, Distribution, Telecom, etc.). The Rest of Europe enjoyed revenue growth of 7.8%, with around 10% increase in Germany, Scandinavia and Italy and positive growth in Benelux. Finally, the Asia-Pacific and Latin America region grew 13.6%, with activity slightly down in Latin America (excluding the Brazilian equipment resale business) and strong growth in Asia-Pacific.
HEADCOUNT
At March 31, 2017, the Group’s total headcount stood at 195,800, up 7% year-on-year, with 111,300 employees in offshore centers (57% of the total headcount).
BOOKINGS
Bookings totaled €3,001 million in Q1 2017, down 3.2% at constant exchange rates on Q1 2016 which benefited from the renewal of a major multi-year contract in the UK public sector.
OUTLOOK FOR 2017
For 2017, the Group forecasts revenue growth at constant exchange rates of 3.0%, an operating margin of 11.7% to 11.9% and organic free cash flow generation in excess of €950 million.
In addition:
- The Group expects the impact of currency movements on revenues to be limited on a full year basis, with the impact of the pound sterling depreciation against the euro offsetting notably the appreciation of the US dollar and the Brazilian real;
- The Group has decided to discontinue its equipment resale activity in Brazil, which represented approximately €60 million in 2016. In order not to disrupt the analysis of quarterly trends, organic growth and growth at constant exchange rates are presented after removing this activity from 2016 and 2017 revenues;
- The impact of acquisitions on revenue growth is estimated at this stage to be a few tens of basis points.
