French IT firm Capgemini expects double digit growth for 2020

Information technology (IT) services provider Capgemini on Thursday said it expects a gradual recovery in the second half of 2020, with a revenue growth at constant exchange rates between 12.5% and 14% for the calendar year.

This is the first time that the Paris-based technology major has committed to spell out a guidance for the year. The firm deferred guidance in April when it announced the first quarter results, citing economic uncertainty caused by the coronavirus outbreak.

However, it said that a sharp deterioration in health conditions and/or the economic environment in the coming months could undermine the attainment of its growth forecast.

The company’s acquisition of Paris-based engineering consulting firm Altran Technologies for €4.4 billion more than offset the pandemic’s impact on revenues, it said.

The IT firm reported that its revenues rose to €7,581 million in the first half of 2020 from €7,007 million a year earlier. Net profit for the period declined by about 20% to €311 million, it said.

The company’s organic growth, adjusted for scope and exchange rate impacts, saw a limited decline of 3.4% in the first six months of 2020, it said.

For the first half of 2020, bookings at the company rose 10.3% year-on-year to €7,841 million. For the second quarter, the firm saw an 18.8% increase in bookings to €4,438 million compared to the same period a year ago.

“The sector and geographic diversification of the client base combined with the high quality offer portfolio developed in recent years have clearly reinforced the resilience of Capgemini’s revenues. In particular, momentum remains strong for digital and cloud services, which increased over 10% in H1, illustrating the structural nature of demand for these services,” the statement added.

The company’s Q2 revenues totaled €4,034 million, up 13.4% year-on-year at constant exchange rates, it said, adding that the period had benefited from the Altran acquisition.

In an analysis of its revenue growth across geographies in Q2, it said the “rest of Europe” saw the highest growth at 24.9%, followed by France at 11.8%, Asia-Pacific and Latin America at 11.7%, North America at 9%, and the United Kingdom and Ireland at 3.7%.

On a combined basis, North America remains the company’s leading region, making up 31% of its revenues for Q2, followed by the rest of Europe at 30%), France  at 21%, the United Kingdom and Ireland at 11%, and Asia-Pacific and Latin America at 7%.

As of June 30, the company’s total headcount stood at 265,100, up 22% year-on-year, mainly following the integration of 50,000 Altran team members. India is home to about half of Capgemini’s workforce. The company bucked the trend in April, when it announced hikes and promotions for its employees, at a time when other businesses initiated pay cuts to deal with the Covid-19 blow.