UK Markets close in 5 hrs 29 mins

Capgemini shares advance on better-than-expected Q3 growth

Sarah Morland
·2-min read
FILE PHOTO: The logo of Capgemini is pictured during the Viva Tech start-up and technology summit in Paris
FILE PHOTO: The logo of Capgemini is pictured during the Viva Tech start-up and technology summit in Paris

By Sarah Morland

(Reuters) - French consulting and IT services provider Capgemini <CAPP.PA> rose as much as 6% on Tuesday as it reported an 18.4% increase in third quarter revenue at constant exchange rates, helped by strong bookings and growth in its digital and cloud offerings.

Capgemini, which offers services to industries ranging from telecoms to aerospace, said revenue was 4.01 billion euros ($4.74 billion) compared with 3.47 billion euros in the year-earlier period.

The firm, which topped France's CAC 40 <.FCHI> and SBF 120 <.SBF120> indices in early trading, is looking to take advantage of a fast-growing cloud revolution as coronavirus-induced lockdowns push businesses to adopt online storage and workflows.

Analysts at JP Morgan said the improvement was progressing slightly ahead of expectations, while Credit Suisse said the results should offer reassurance.

Chief Executive Aiman Ezzat said on a call with analysts he expected a return to organic growth as early as in the second quarter of next year, although the recovery would slow down in coming quarters.

Capgemini also confirmed its full-year targets, including revenue growth between 12.5% and 14.0%, adding it should exceed the mid-point of this range.

Ezzat said the pandemic and a shift towards remote-working highlighted the importance of businesses being able to quickly move their activities online - driving up the firm's digital and cloud services, which now make up over 60% of its business.

"People who weren't in the cloud suffered, and so we've seen an acceleration of projects linked to that," he said.

Capgemini, whose clients range from German drugs firm Bayer <BAYGn.DE> to Mercedes-Benz <DAIGn.DE> and the UK Ministry of Defence, is also planning to launch new services in life sciences R&D, 5G networks and self-driving vehicles.

(Reporting by Sarah Morland in Gdansk; Editing by Sam Holmes, Kirsten Donovan and Mike Harrison)