February 20, 2014 / 7:26 AM / in 4 years

UPDATE 1-Capgemini sees improved demand, margin beats target

(Adds detail, background, dividend)

PARIS, Feb 20 (Reuters) - French technology consultancy Capgemini forecast improved demand and profitability for 2014 after posting a full-year operating margin slightly above expectations, helped by a strong year-end performance, notably in North America.

Europe’s largest IT services group by market value said on Thursday its operating margin reached 8.5 percent of 2013 consolidated revenue, a rise of 40 basis points compared with 2012, overshooting a target of a 30 basis point rise.

It said it expected organic revenue growth of 2-4 percent for 2014 and an operating margin of between 8.8 percent and 9 percent, while organic free cash flow would exceed 500 million euros ($688 million).

The group said it now generated 30 percent of revenue outside Europe and that business was picking up in Latin America.

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 rivals include IBM, Accenture and France’s Atos.

The group’s revenue fell 1.7 percent in 2013 to 10.1 billion euros, due to unfavourable movements in currencies such as the U.S. dollar, the British pound and the Brazilian real. On a constant foreign exchange rate basis, it rose 0.9 percent.

Profit for the year attributable to shareholders reached 442 million euros, against 353 million in 2012. Capgemini proposed lifting the dividend to 1.1 euros a share from 1 euro the previous year. ($1 = 0.7271 euros) (Reporting by Astrid Wendlandt; Editing by James Regan)

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