Capgemini: strong growth momentum in H1 2018


The Board of Directors of Capgemini SE, chaired by Paul Hermelin, convened to review and authorize the issue of the accounts[1] of Capgemini Group for the 1st half of 2018.

For Paul Hermelin, Chairman and Chief Executive Officer of the Capgemini Group: “Our performance during the first half of the year was marked by a very dynamic 8% growth at constant exchange rates and a further increase in our operating margin of +20 basis points, bringing us ever closer to our stated mid-term ambitions. The sector and geographic trends observed in the first quarter were borne out, with strong demand in North America and Europe, and more specifically in the Consumer Products and Retail, Manufacturing and Financial Services sectors.

Our Digital and Cloud portfolio, which now generates 45% of our revenues, is at the heart of our service offering and is successfully meeting the demands of large corporate customers. In addition, we continue to invest in innovation across our entire service portfolio and especially in artificial intelligence.

Our ability to manage complex programs calling on our wide range of expertise is recognized by the most demanding clients, as reflected in the high quality of our recent wins.

With these results, we raise our full-year revenue growth outlook and confirm our targets for operating margin and organic free cash flow.”

1st half key figures

(In millions of euros) H1 2017

for IFRS 15)[2]

H1 2018 Change
Revenues 6,280 6,467 +3.0%

+8.0% at constant exchange rates

Operating margin* 672 707  
as a % of revenues 10.7% 10.9% +20bp
Operating profit 538 521  
as a % of revenues 8.6% 8.0%  
Profit for the year, Group share 375 314  
Basic earnings per share (€) 2.23 1.88 -16%
Normalized earnings per share (€)* 2.81 2.75 a  -2%
Organic free cash flow* +64 +11 -€53 million
Net cash & cash equivalents / (Net debt) (1,929) (2,192) -€263 million
a Excluding a €18 million expense recognized in H1 2018 due to the transitional impact of the tax reform in the U.S.

The Group generated revenues of €6,467 million in H1 2018, up 3.0% on H1 2017 reported revenues and 8.0% at constant exchange rates*. Organic growth* (i.e. excluding the impact of currency fluctuations and changes in Group scope) was 6.4%.

Group growth reached 8.7% at constant exchange rates and 6.7% on an organic basis in Q2.

This momentum continues to be fueled by the growth of Digital and Cloud activities, up over 20% at constant exchange rates in the first-half of the year. It now accounts for around 45% of Group revenues.

Bookings totaled €6,640 million in the first six months of 2018, an 11% increase at constant exchange rates year-on-year.

The operating margin* is €707 million, up 5% on H1 2017. It represents 10.9% of revenues, an increase of 20 basis points year-on-year mainly driven by to the profitability improvement in continental Europe.

Other operating income and expenses totaled €186 million, compared with €134 million in H1 2017, reflecting a higher seasonal weighting of certain expenses (restructuring and acquisition) and some other non-recurring charges in the first half of this year.

Operating profit totaled €521 million, or 8.0% of revenues. The 3% year-on-year decline reflects in particular the 5 points headwind from currencies on Group revenues.

Net financial expense is €39 million, up €11 million on H1 2017 with the impacts of the currency hedging operations.

The income tax expense of €169 million includes a tax charge of €18 million in respect of the transitional impact of the tax reform in the U.S[3]. Adjusted for this item, the effective tax rate rose, as announced, from 27.4% in 2017 to 31.4%.

Net profit (Group share) amounted to €314 million for H1 2018, compared with €375 million in H1 2017. Basic EPS (earnings per share) is €1.88 and Normalized EPS* is €2.64 and €2.75 adjusted for this transitional tax expense.

The Group generated organic free cash flow* of €11 million in H1 2018 compared with €64 million in the prior-year period. This variation is notably attributable to early unwinding of hedging instruments that contributed €24 million in 2017 and higher tax payments in 2018 for €23 million.

Return to shareholder amounted to €484 million over the period, with a dividend payment of €284 million and share buybacks totaling €200 million. Furthermore, the Group spent a net amount of €409 million on the bolt-on acquisitions closed during the period.


For 2018, the Group:

  • raises its growth target and now aims at a revenue growth at constant rates slightly above 7.0% (versus a revenue progression “between 6 to 7%” formerly), and
  • confirms its objectives to increase profitability, with an operating margin of 0% to 12.2%, and to generate an organic free cash flow in excess of €1 billion.

In addition, following the slight strengthening of the US dollar against the euro during the second quarter, currency movements are now expected to negatively impact revenue growth by around 3 points (compared with the previous forecast of 3.5 points).


In H1 2018, momentum was strongest in North America (31% of Group revenues), with revenues growing 17.2% at constant exchange rates. The Retail sector led the way, followed by Financial Services and the Public sector. North America was also the main beneficiary of the Group’s recent acquisitions made in Digital. Operating margin was 13.2%, slightly down from 13.4% in H1 2017, but other operational indicators are now improving again.

The United Kingdom and Ireland (12% of Group revenues) reported revenues down 5.5% at constant exchange rates, with the decline in the public sector and stable revenues in the private sector (two-thirds of revenues in this region) in line with the Group’s expectations. As expected the operating margin contracted, coming in at 12.2% compared with 16.0% a year earlier.

Revenue growth in France (22% of Group revenues) of 6.1% was driven by Application Services, with the Financial Services, Consumer Products and Energy sectors particularly strong. The operating margin improved 120 basis points year-on-year to 8.4% of revenues.

The Rest of Europe region (28% of Group revenues) posted growth of 7.9% at constant exchange rates, with double-digit rates in Germany and Scandinavia. The Financial Services sector was the main driving force, followed by the Retail, Manufacturing and Energy sectors. The operating margin rose 70 basis points to 12.0% for the half-year.

The Asia-Pacific and Latin American region (7% of Group revenues) reported growth of 3.4% at constant exchange rates. In Asia-Pacific, which accounts for around three-quarters of activity in this region, growth was fueled by the Consumer Products, Financial Services and Public sectors. Latin America remained broadly stable over the period, with the economic environment that remains weak in Brazil and solid growth in Mexico. With Latin America’s activities returning to profit, the operating margin for the region as a whole improved rapidly, from 6.2% in H1 2017 to 11.7% this year.


Consulting Services (6% of Group revenues), bolstered by recent acquisitions, reported a 31.5% revenue increase at constant exchange rates, with strong growth in North America and the Rest of Europe region. Activity generated by clients’ digital transformation needs was particularly buoyant in the Consumer Products, Financial Services and Manufacturing sectors. The operating margin is 12.1% of revenues, up 150 basis points year-on-year.

Technology & Engineering Services (15% of Group revenues) progressed 5.1% with all Group regions contributing to this growth, led by North America. The operating margin stands at 11.8% for the period compared with 12.4% one year ago.

Application Services (63% of Group revenues), fueled by the customer demand related to the new needs in the Digital and Cloud, posted revenue growth of 10.5% at constant exchange rates. North America, France and the Rest of Europe reported the strongest momentum. The operating margin rate is 12.7%, up 70 basis points.

Other Managed Services (16% of Group revenues) revenues declined 4.4%. This is notably fueled by the lower activity in the UK public sector which is partially offset by the strong growth in cloud integration and orchestration services. The operating margin rate is 6.9% compared with 8.1% in H1 2017.


Growth momentum continued in the second quarter with revenues of €3,314 million, up 8.7% at constant exchange rates and 6.7% at constant Group scope and exchange rates.

Regional growth rates are generally consistent with the first quarter, with North America reporting the strongest growth (+19.4%). In Europe, growth strengthened slightly in France (+6.7%), the Rest of Europe region remained robust (+7.5%) and the United Kingdom and Ireland region contracted as anticipated (-6.3%). Finally, as expected, growth accelerated in the Asia-Pacific and Latin America region (+5.4%).

Bookings were up 8% at constant exchange rates to €3,446 million. At June 30, 2018, the Group’s total headcount stood at 205,600, up 4.7% year-on-year, with employees in offshore centers to 117,000 (57% of the total headcount).

Balance Sheet

The Group had €1,750 million in cash and cash equivalents (net of bank overdrafts) at June 30, 2018.  After accounting for borrowings of €4,137 million, cash management assets and derivative instruments, Group net debt* is €2,192 million at the end of H1 2018, compared with €1,209 million at December 31, 2017 and €1,929 million at June 30, 2017.

Through the partial repurchase of the bond issue maturing in 2020 and the new bond issues maturing in 2024 and 2028, the Group extended the average maturity of its bond debt with no significant impact on its future cash coupon.

Furthermore, on July 2, 2018, the Group repaid at maturity a €500 million bond issued in 2015.

* The terms and Alternative Performance Measures marked with an (*) are defined and/or reconciled in the appendix to this press release.

[1] Limited review procedures on the interim consolidated financial statements have been completed. The auditors are in the process of issuing their report.

[2] In this press release, the 2017 accounts have been restated for the impact of IFRS 15, applicable from January 1, 2018. Further information may be found in the appendix to this press release.

[3] Impact which is time-limited of the measures included in the tax reform in the United States which were still under evaluation at the 2017 results publication in February 2018.

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