Capgemini reports growth in first half of 2023 despite economic challenges

Revenues were up 6.9 per cent for the French service provider

Capgemini generated revenues of €11.42bn in the first half of 2023, up 6.9 per cent on a reported basis and 7.9 per cent at constant exchange rates.

Organic growth was also up by 7.3 per cent.

The French service provider said that after two years of record growth, the more challenging macroeconomic environment led to a slowdown in line with its expectations.

Capgemini growth in the second quarter was therefore lower than in the first, reaching 5.2 per cent at constant exchange rates and 4.7 per cent on an organic basis, despite a particularly demanding comparison base (growth at constant exchange rates of 19.3 per cent in Q2 2022).

The company said this performance is driven by "good momentum" in its added-value services, particularly in the area of Intelligent Industry, as well as in activities driven by cloud, data and AI, which are the foundation of the group clients' major digital transformation projects.

The H1 report shows operating margins of €1.4bn, or 12.4 per cent of revenues, an increase of 9 per cent or 20 basis points year-on-year.

In line with group expectations, a 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 €262m, up €29m year-on-year.

Capgemini's operating profit was therefore up 8 per cent at €1,151bn, or 10.1 per cent of revenues.

The United Kingdom and Ireland region (12 per cent of group revenues in H1 2023) reported growth of 12.0 per cent at constant exchange rates.

This performance was mainly driven by public sector and manufacturing, consumer goods and retail, and financial services sectors. Operating margin remains at the same high level as in H1 2022, at 18.4 per cent.

"The group delivered another solid performance in the first half. In a softer economic environment, as expected, we achieved 7.9 per cent revenue growth at constant exchange rates and operating margin improvement. These results put us among the leaders in our industry," said Aiman Ezzat, CEO at Capgemini.

"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 €2bn in AI 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 Google Cloud and Microsoft, while training most of our workforce through our Data & AI Campus to fully leverage the power of generative AI in our operations.

"We have many client projects underway, a strong pipeline, and plan to double Data & AI teams to 60,000 in the next three years.

We confirm all our 2023 objectives announced at the beginning of the year for revenue growth, operating margin improvement and free cash flow."