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In H112, Capgemini’s top line revenue growth of 8.3% to €5.2b benefited significantly from favourable exchange rate effects as well as the integration of acquired companies such as Prosodie. Like-for-like, the business still grew but in the lower single digits at 2.3%. The adjusted operating margin nudged up by 3 points compared to H111, to 6.4%. Highlighting the impact of the Prosodie acquisition, revenues from the French business would have declined slightly; however the addition of Prosodie meant revenues were boosted and grew by 7.4% to €1,039m.
The outlook for the business as a whole is favourable. Indeed, Capgemini has revised upwards its growth outlook and now predicts annual revenue growth in excess of 1% (vs. the previous flat forecast). The book-to-bill stats explain why. Despite the Outsourcing Services business only managing 0.9% growth in H1, Capgemini describes “dynamic activity” in the business in H1 resulting in a 21.4% increase in bookings. Outside of outsourcing (technology services, consulting services, and local professional services), the book-to-bill was a comfortable 1.09, while in Q2 it was 1.16.
However, not all geographies are performing as well as others. It’s a real mixed bag. At the two ends of the scale, the North American business charged ahead with growth of 9.7% like for like and an improvement in the operating margin to 8.7%. By contrast, Benelux continued to be a problem child (as it is for all the SITS providers) and revenues contracted by 10.3%.
Meanwhile, the UK business performed exactly in line with the Group i.e. 8.3% top line growth, 2.3% like for like growth (to €987m). Capgemini is pleased to have achieved this growth in H1 despite the public sector budget cuts and the UK business’ heavy reliance on the sector. However, it is lower growth than the 3.9% reported in Q112 (see Capgemini UK and its two halves). The operating margin also increased – by 0.7 points – to 6.8%. We will be looking closely ‘under the covers’ of the Capgemini UK business when we listen in on the analyst call this morning. As we have pointed out previously, the business is really one of ‘two halves’ – the HMRC Aspire contract and the ‘rest’. TechMarketView subscribers will be able to read our view on how the business is really performing in HotViewsExtra later today.
