February 20, 2013 / 7:11 PM / 5 years ago

UPDATE 1-Capgemini sees 2013 growth, margins edging higher

* Sees growth in 2013 sales, operating margin

* Says U.S market better than “mediocre” Europe

* Investment appetite grows thanks to cost-cutting (Adds details, background, analysts estimates)

By Alice Cannet

PARIS, Feb 20 (Reuters) - Capgemini predicted organic revenue and operating margin would edge higher this year thanks to a better geographic sales mix and clients’ appetite for cost-cutting services.

Europe’s largest IT services group by market cap sees organic sales this year growing at the same rate as in 2012, or 1.2 percent, the company said in a statement on Wednesday, as it reached its growth target for the year.

The U.S market, where the group now makes a fifths of its sales, will be key as the macroeconomic environment in Europe remains weak, Chief Executive Paul Hermelin said.

“Little by little, our dependence on Europe is shrinking. We are proud to be first in Europe but I think being a global player is good for the company,” he told a conference call.

Tech services groups have been facing strong pricing pressure and stiff competition as governments and companies, especially in Europe, cut their IT spending and delay projects in response to slower growth and macroeconomic worries.

Capgemini’s European revenue shrank to 72 percent of the total last year, from 80 percent in 2010. The U.S, one of the group’s most profitable regions, now makes up 20 percent of sales from 18 percent in 2010.

Capgemini, which helps companies and governments cut costs and improve operations through consulting, outsourcing and other services, could also benefit in 2013 from a “certain appetite for investment” seen at large clients, Hermelin said.

“This investment is either turned towards the quest for savings and competitiveness but also innovation when it is fed by great technological trends such as the cloud, big data and mobility,” he added.

The IT sector’s prospects improved since January when India’s top software exporter Tata Consultancy Services joined rival Infosys in posting a stronger-than-expected quarterly profit. .

The company’s rivals also include IBM, Accenture and France’s Atos which will publish full-year earnings on Thursday.


Full-year sales reached 10.26 billion euros in 2012 slightly ahead of the analysts average estimate of 10.23 billion euros according to Thomson Reuters I/B/E/S consensus.

In the company’s top market, France, organic sales fell 2.1 percent over the full-year while Benelux continue to drag revenue down, with sales down 11.8 percent.

Capgemini said it expected its operating margin before amortization of intangible assets acquired through acquisitions to exceed 8.3 percent in 2013, compared to 8 percent in 2012.

Current operating profit reached 787 million euros, above analysts estimate of 749 million euros, representing a margin of 7.7 percent.

Shares in Capgemini are up 12.2 percent so far this year, after rising 36 percent in 2012, valuing the company at 5.6 billion euros compared to 4.8 billion for French peer Atos. (Reporting by Alice Cannet; Editing by Christian Plumb)

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