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robust growth and improved operating margin
- H1 2023 revenues of €11,426 million, up +6.9%
- Growth at constant exchange rates* of +7.9% in H1 and +5.2% in Q2
- Operating margin rate* up +20 basis points to 12.4%
- Organic free cash flow* of -€53 million
- €2 billion to be invested over 3 years in Artificial Intelligence
Thanks to a strong strategic positioning, we continue to gain market share as we accompany our clients in their transition towards a digital and sustainable economy.
I am convinced that generative AI will play a major role in this transition. The Group will invest €2 billion in Artificial Intelligence to build its leadership in this breakthrough technology, that must be deployed responsibly, reliably, and sustainably. We are developing a portfolio of industry-specific offers and signing strategic partnerships, notably with
We confirm all our 2023 objectives announced at the beginning of the year for revenue growth, operating margin improvement and free cash flow.”
1ST HALF
(in millions of euros) | H1 2022 | H1 2023 | Change |
Revenues | 10,688 | 11,426 | +6.9% |
Operating margin* | 1,301 | 1,413 | +9% |
as a % of revenues | 12.2% | 12.4% | +0.2pt |
Operating profit | 1,068 | 1,151 | +8% |
as a % of revenues | 10.0% | 10.1% | +0.1pt |
Net profit (Group share) | 667 | 809 | +21% |
Basic earnings per share (€) | 3.91 | 4.70 | |
Normalized earnings per share (€)* | 5.03 a | 5.80 | |
Organic free cash flow* | 193 | -53 | -246 |
Net cash / (Net debt)* | (4,094) | (3,244) | |
a Excluding tax expenses of |
After two years of record growth, the more challenging macro-economic environment led to a slowdown in line with Group expectations.
This performance is driven by good momentum in Capgemini’s high added-value services, particularly in the area of Intelligent Industry, as well as in activities driven by Cloud, Data & Artificial Intelligence, which are the foundation of Group clients’ major digital transformation projects.
Bookings totaled €11,968 million in the first half of 2023. Given the particularly demanding comparison base, with growth of +22% in H1 2022, this represents an increase of +4% at constant exchange rates. The book-to-bill ratio is 1.05 for H1, reflecting ongoing robust commercial momentum.
The operating margin* is €1,413 million, or 12.4% of revenues, an increase of +9% or +20 basis points year-on-year. In line with Group expectations, the shift in the project mix, towards more innovative and value creating offers, more than offset the higher operating cost base.
Other operating income and expenses represent a net expense of €262 million, up €29 million year-on-year.
Capgemini’s operating profit is therefore up +8% at €1,151 million, or 10.1% of revenues.
The net financial expense is €22 million, down €49 million on H1 2022.
The income tax expense is €313 million. The effective tax rate is 27.8% in H1 2023, compared with 29.9% in H1 2022 (excluding tax expenses related to the impact of the US tax reform2).
Taking into account the share of profits of associates and non-controlling interests for -€7 million, the Group share in net profit is up +21% year-on-year at €809 million for the first six months of 2023. Basic earnings per share also rose by +20% year-on-year to €4.70. Normalized earnings per share* reached €5.80, compared with €4.87 in H1 2022 and €5.03 excluding tax expenses related to the impact of the US tax reform.
Finally, as anticipated, organic free cash flow* generation was negative for the first half of 2023, at -€53 million.
OPERATIONS BY REGION
The
The Rest of
Revenues in
Finally, revenues in
OPERATIONS BY BUSINESS
Strategy & Transformation services (8% of Group total revenues* in H1 2023) posted growth in total revenues of +12.2% at constant exchange rates compared to H1 2022. This ongoing sustained momentum reflects the importance placed by Group clients on the most strategic and value-creating projects.
Applications & Technology services (63% of Group revenues and Capgemini’s core business) recorded solid growth in total revenues of +8.1% at constant exchange rates.
Finally, Operations & Engineering total revenues (29% of Group revenues) grew +6.1% at constant exchange rates.
OPERATIONS IN Q2 2023
Capgemini’s performance in Q2 2023 was a prolongation of the trends observed since the beginning of the year, extending as expected the gradual slowdown that began in the previous quarter. Group revenues totaled €5,697 million, up +5.2% at constant exchange rates and +4.7% adjusted for Group scope and exchange rate impacts.
Momentum remained robust in the
Bookings reached €6,101 million in the second quarter. Given the particularly demanding comparison base, this represents an increase of +1% at constant exchange rates. The book-to-bill ratio of 1.07 is above last years’ average for a Q2.
HEADCOUNT
At
BALANCE SHEET
Capgemini’s balance sheet structure was relatively unchanged in H1 2023.
At
On the back of its solid cash position, the Group redeemed in full and at maturity its €1.0 billion bond issued in
OUTLOOK
The Group’s financial targets for 2023 are:
- Revenue growth of +4% to +7% at constant currency;
- Operating margin of 13.0% to 13.2%;
- Organic free cash flow of around €1.8 billion.
The inorganic contribution to growth should be 0.5 points at the lower end of the target range and 1.0 point at the upper end.
CONFERENCE CALL
All documents relating to this publication will be posted on the
PROVISIONAL CALENDAR
November 7, 2023 Q3 2023 revenues
February 14, 2024 FY 2023 results
April 30, 2024 Q1 2024 revenues
May 16, 2024 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
This press release does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in
ABOUT
Get the Future You Want | www.capgemini.com
* *
*
APPENDICES3
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 | Q1 2023 | Q2 2023 | H1 2023 |
Organic growth | +10.1% | +4.7% | +7.3% |
Changes in Group scope | +0.6 pts | +0.5 pts | +0.6 pts |
Growth at constant exchange rates | +10.7% | +5.2% | +7.9% |
Exchange rate fluctuations | +0.2 pts | -2.0 pts | -1.0 pt |
Reported growth | +10.9% | +3.2% | +6.9% |
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 expense” 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 period (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.
Net debt (or net cash and cash equivalents) comprises (i) cash and cash equivalents, as presented in the Consolidated Statement of Cash Flows (consisting of short-term investments and cash at bank) less bank overdrafts, (ii) cash management assets (assets presented separately in the Consolidated Statement of Financial Position due to their characteristics), less (iii) short- and long-term borrowings. Account is also taken of (iv) the impact of hedging instruments when these relate to borrowings, inter-company loans and own shares.
RESULTS BY REGION
Revenues | Year-on-year growth | Operating margin rate | |||||
H1 2023 (in millions of euros) | Reported | At constant exchange rates | H1 2022 | H1 2023 | |||
3,288 | +3.7% | +3.0% | 15.5% | 15.2% | |||
1,386 | +7.7% | +12.0% | 18.4% | 18.4% | |||
2,308 | +9.2% | +9.2% | 10.7% | 11.1% | |||
Rest of | 3,472 | +9.8% | +11.4% | 9.8% | 10.5% | ||
972 | +1.6% | +4.8% | 9.7% | 10.2% | |||
TOTAL | 11,426 | +6.9% | +7.9% | 12.2% | 12.4% |
OPERATIONS BY BUSINESS
Total revenues | Year-on-year growth | ||
H1 2023 (% of Group revenues) | At constant exchange rates in Total revenues of the business | ||
Strategy & Transformation | 8% | +12.2% | |
Applications & Technology | 63% | +8.1% | |
Operations & Engineering | 29% | +6.1% |
SUMMARY INCOME STATEMENT AND OPERATING MARGIN
(in millions of euros) | H1 2022 | H1 2023 | Change |
Revenues | 10,688 | 11,426 | +6.9% |
Operating expenses | (9,387) | (10,013) | |
Operating margin | 1,301 | 1,413 | +9% |
as a % of revenues | 12.2% | 12.4% | |
Other operating income and expense | (233) | (262) | |
Operating profit | 1,068 | 1,151 | +8% |
as a % of revenues | 10.0% | 10.1% | |
Net financial expense | (71) | (22) | |
Income tax income/(expense) | (327) | (313) | |
(-) Non-controlling interests and share of profit of associates | (3) | (7) | |
Net profit (Group share) | 667 | 809 | +21% |
NORMALIZED AND DILUTED EARNINGS PER SHARE
(in millions of euros) | H1 2022 | H1 2023 | Change |
Average number of shares outstanding | 170,561,706 | 171,947,414 | |
BASIC EARNINGS PER SHARE (in euros) | 3.91 | 4.70 | +20% |
Diluted average number of shares outstanding | 176,218,421 | 178,089,362 | |
DILUTED EARNINGS PER SHARE (in euros) | 3.78 | 4.54 | +20% |
(in millions of euros) | H1 2022 | H1 2023 | Change |
Net profit (Group share) | 667 | 809 | +21% |
Effective tax rate, excluding exceptional tax expenses | 29.9% | 27.8% | |
(-) Other operating income and expenses, net of tax | 163 | 189 | |
Normalized profit for the period | 830 | 998 | |
Average number of shares outstanding | 170,561,706 | 171,947,414 | |
NORMALIZED EARNINGS PER SHARE (in euros) | 4.87 | 5.80 | +19% |
In H1 2022, the Group recorded tax expenses of €29 million related to the impact of the US tax reform and which, taking into account the average number of shares outstanding, represented an amount of €0.16 per share. Adjusted for these tax expenses, normalized earnings per share were therefore €5.03.
CHANGE IN CASH AND CASH EQUIVALENTS AND ORGANIC FREE CASH FLOW
(in millions of euros) | H1 2022 | H1 2023 |
Net cash from operating activities | 569 | 244 |
Acquisitions of property, plant and equipment and intangible assets, net of disposals | (145) | (125) |
Net interest cost | (74) | (24) |
Repayments of lease liabilities | (157) | (148) |
ORGANIC FREE CASH FLOW | 193 | (53) |
Other cash flows from (used in) investing and financing activities | (964) | (481) |
Increase (decrease) in cash and cash equivalents | (771) | (534) |
Effect of exchange rate fluctuations | 25 | (70) |
Opening cash and cash equivalents, net of bank overdrafts | 3,119 | 3,795 |
Closing cash and cash equivalents, net of bank overdrafts | 2,373 | 3,191 |
NET DEBT
(in millions of euros) | |||
Cash and cash equivalents | 2,403 | 3,802 | 3,195 |
Bank overdrafts | (30) | (7) | (4) |
Cash and cash equivalents, net of bank overdrafts | 2,373 | 3,795 | 3 ,191 |
Cash management assets | 415 | 386 | 575 |
Long-term borrowings | (6,649) | (5,655) | (5,663) |
Short-term borrowings and bank overdrafts | (200) | (1,102) | (1,339) |
(-) Bank overdrafts | 30 | 7 | 4 |
Borrowings, excluding bank overdrafts | (6,819) | (6,750) | (6,998) |
Derivative instruments | (63) | 3 | (12) |
(4,094) | (2,566) | (3,244) |
1 Limited review procedures on the interim consolidated financial statements have been completed. The auditors are in the process of issuing their report.
2 Up to
3 Note that in the appendix, certain totals may not equal the sum of amounts due to rounding adjustments.
Attachments
Capgemini _-_2023-07-28_-_H1_2023_Results- Capgemini_H12023_infographics_ENG_final
- Capgemini_Q22023_infographics_ENG_final
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