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Victoire Grux
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vincent.biraud@capgemini.com
- Revenues of €22,522 million in 2023, up +2.4%
- Growth at constant exchange rates* of +4.4% for the full year, and -0.2% in Q4
- Operating margin* up 30 basis points to 13.3% of revenues
- +7% increase in net profit, Group share, with normalized earnings per share* up +8%
- Organic free cash flow0F* of €1,963 million
- Proposed dividend of €3.40 per share
Our clients recognize the value we bring as their business and technology transformation partner. In 2023, the Group continued to invest in building the capabilities and solutions to help them transition to an increasingly digital and sustainable economy.
This was notably the case for generative AI, which is top of mind for all large organizations. We are positioned as a leading player enabling our clients to explore, test and scale solutions for tangible business impact. Through our €2 billion investment plan announced last July, we continue to strengthen and upskill our teams, invest in solutions and leverage a broad ecosystem of technology partners including Microsoft,
In terms of sustainability offerings, we also stepped up our efforts in 2023. We continue to help our clients accelerate their transition towards Net Zero through strategy definition, business model adaptation and design of sustainable products and services. 2023 was also an important year on our own ESG roadmap, with major progress achieved towards a more sustainable and inclusive world.
The Group is well-equipped to improve its performance in 2024, while the environment is expected to remain soft in the first half. This year again, the Group expects to grow, with the trough in Q1, improve its operating margin and maintain a superior free cash flow conversion.”
(in millions of euros) | 2022 | 2023 | Change |
Revenues | 21,995 | 22,522 | +2.4% |
Operating margin* | 2,867 | 2,991 | +4% |
as a % of revenues | 13.0% | 13.3% | +30 basis points |
Operating profit | 2,393 | 2,346 | -2% |
as a % of revenues | 10.9% | 10.4% | |
Net profit (Group share) | 1,547 | 1,663 | +7% |
Basic earnings per share (€) | 9.09 | 9.70 | +7% |
Normalized earnings per share (€)* | 11.52 a | 12.44 | +8% |
Organic free cash flow* | 1,852 | 1,963 | +€ 111m |
Net cash / (Net debt)* | (2,566) | (2,047) | |
a excluding tax expenses of €73 million in 2022 related to the impact of the US tax reform |
After two years of record growth, persisting macroeconomic challenges and rising geopolitical tensions led to a gradual market slowdown in 2023 that came in line with Group expectations.
Bookings totaled €23,887 million in 2023, a year-on-year increase of +2.6% at constant exchange rates, representing a book-to-bill ratio of 1.06 for the year, and 1.18 in Q4. This reflects sustained commercial momentum despite lengthened decision cycles.
While large corporations and organizations hold firm on their digital and sustainability ambitions, they are increasingly prioritizing operational agility and cost efficiency. This translates into strong demand for transformation programs with short payback, which leverage the Group’s high value-added service offerings most notably in Intelligent Industry, as well as in activities driven by Cloud, Data & Artificial Intelligence.
This ongoing shift in Capgemini’s offerings portfolio towards more value creating services, combined with strengthened operational efficiency, generated a 40 basis points increase in gross margin, despite the rising inflation and market slowdown.
As a result, the operating margin* increased to 13.3% of revenues, or €2,991 million, up +4% in value compared to 2022. This year-on-year improvement of 30 basis points exceeds the target of 0-20 basis points set for 2023.
Other operating income and expense was a net expense of €645 million, compared with €474 million in 2022. This increase is mainly attributable to higher restructuring charges, which increased by €97 million, and to a change in French accounting practices as set by the
Capgemini’s operating profit was €2,346 million, or 10.4% of revenues, compared with €2,393 million in 2022.
The net financial expense was €42 million compared with €129 million in 2022, this evolution being mainly driven by higher interest income in a context of rising interest rates.
The income tax expense was €626 million compared with €710 million last year. The effective tax rate was slightly down at 27.2%, compared with 28.1% in 2022 (excluding €73 million tax expenses related to the impact of the US tax reform).
Taking into account the share of profits of associates and non-controlling interests, the Group share in net profit rose by +7% year-on-year to €1,663 million. Basic earnings per share increased also by +7% to €9.70. Normalized earnings per share* was €12.44, compared with €11.09 in 2022 and €11.52 excluding the tax expenses related to the impact of the US tax reform.
Organic free cash flow* amounted to €1,963 million, above the target of “around €1.8 billion” set for the year.
The Board of Directors has decided to recommend the payment of a dividend of €3.40 per share at the Shareholders’ Meeting of
OPERATIONS BY REGION
At constant exchange rates, the
The Rest of
Conversely, revenues in
Finally, revenues in the
OPERATIONS BY BUSINESS
At constant exchange rates, Strategy & Transformation consulting services (9% of Group revenues) reported a +8.6% growth in total revenues* in 2023. This sustained momentum illustrates the strength of the Group's strategic positioning as a partner for its clients' digital and sustainable ambitions.
Applications & Technology services (62% of Group revenues and Capgemini’s core business) reported a +4.5% increase in total revenues.
Finally, Operations & Engineering services total revenues (29% of Group revenues) grew +2.8%.
OPERATIONS IN Q4 2023
As expected, the progressive deceleration in
At constant exchange rates, revenues in the
Bookings rose +1.7% in Q4 at constant exchange rates to reach €6,643 million, corresponding to a book-to-bill ratio of 1.18.
HEADCOUNT
At
The onshore workforce decreased slightly at 145,800 employees, down by 2% year-on-year, while the offshore workforce was down by 7% to 194,600 employees, i.e., 57% of the total headcount.
BALANCE SHEET
At
CORPORATE SUSTAINABILITY
In line with the commitments of its ESG (Environment, Social and Governance) Policy presented in
Firstly, the Group further strengthened its position as a leader committed to fostering diversity and inclusion in various dimensions. On gender diversity specifically, the proportion of women in the total workforce reached 38.8% at the end of 2023, up by 1 point year-on-year and almost 6 points since 2019. The proportion of women among executive leadership positions reached 26.2%, up by 1.8 points year-on-year and more than 9 points since 2019.
In human capital development, the Group provided 17.8 million learning hours to employees during the past year, compared with 17.4 million in 2022. The average number of learning hours per employee stands at 53.8 hours, up +5% year-on-year in line with the Group’s commitment.
The scale of impact through digital inclusion initiatives expanded significantly in 2023. Among the largest projects in terms of new beneficiaries, the
Regarding environmental sustainability, as a reminder,
In recognition of its continued ESG performance, the Group’s inclusion in the Dow Jones Sustainability Index (DJSI)
OUTLOOK
The Group’s financial targets for 2024 are:
- Revenue growth of 0% to +3% at constant currency;
- Operating margin of 13.3% to 13.6%;
- Organic free cash flow of around €1.9 billion.
The inorganic contribution to growth should be marginal at the lower end of the target range, and up to 1 point at the upper end.
CONFERENCE CALL
All documents relating to this publication will be posted on the
PROVISIONAL CALENDAR
April 30, 2024 Q1 2024 revenues
May 16, 2024 Shareholders’ meeting
July 26, 2024 H1 2024 results
The dividend payment schedule to be submitted to the Shareholders’ Meeting for approval would be:
May 29, 2024 Ex-dividend date on Euronext Paris
May 31, 2024 Payment of the dividend
DISCLAIMER
This press release may contain forward-looking statements. Such statements may include projections, estimates, assumptions, statements regarding plans, objectives, intentions and/or expectations with respect to future financial results, events, operations and services and product development, as well as statements, regarding future performance or events. Forward-looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans”, “projects”, “may”, “would”, “should” or the negatives of these terms and similar expressions. Although Capgemini’s management currently believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking statements are subject to various risks and uncertainties (including, without limitation, risks identified in Capgemini’s Universal Registration Document available on Capgemini’s website), because they relate to future events and depend on future circumstances that may or may not occur and may be different from those anticipated, many of which are difficult to predict and generally beyond the control of
This press release does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in
ABOUT
Get the Future You Want | www.capgemini.com
* *
*
APPENDIX3F3
BUSINESS CLASSIFICATION
- Strategy & Transformation includes all strategy, innovation and transformation consulting services.
- Applications & Technology brings together “Application Services” and related activities and notably local technology services.
- Operations & Engineering encompasses all other Group businesses. These comprise Business Services (including Business Process Outsourcing and transaction services), all Infrastructure and Cloud services, and R&D and Engineering services.
- Operations & Engineering encompasses all other Group businesses. These comprise Business Services (including Business Process Outsourcing and transaction services), all Infrastructure and Cloud services, and R&D and Engineering services.
DEFINITIONS
Organic growth or like-for-like growth in revenues is the growth rate calculated at constant Group scope and exchange rates. The Group scope and exchange rates used are those for the reported period. Exchange rates for the reported period are also used to calculate growth at constant exchange rates.
Reconciliation of growth rates | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 |
Organic growth | +10.1% | +4.7% | +2.0% | -0.9% | +3.9% |
Changes in Group scope | +0.6 pts | +0.5 pts | +0.3 pts | +0.7 pts | +0.5 pts |
Growth at constant exchange rates | +10.7% | +5.2% | +2.3% | -0.2% | +4.4% |
Exchange rate fluctuations | +0.2 pts | -2.0 pts | -3.6 pts | -2.2 pts | -2.0 pts |
Reported growth | +10.9% | +3.2% | -1.3% | -2.4% | +2.4% |
When determining activity trends by business and in accordance with internal operating performance measures, growth at constant exchange rates is calculated based on total revenues, i.e., before elimination of inter-business billing. The Group considers this to be more representative of activity levels by business. As its businesses change, an increasing number of contracts require a range of business expertise for delivery, leading to a rise in inter-business flows.
Operating margin is one of the Group’s key performance indicators. It is defined as the difference between revenues and operating costs. It is calculated before “Other operating income and expense” which include amortization of intangible assets recognized in business combinations, expenses relative to share-based compensation (including social security contributions and employer contributions) and employee share ownership plan, and non-recurring revenues and expenses, notably impairment of goodwill, negative goodwill, capital gains or losses on disposals of consolidated companies or businesses, restructuring costs incurred under a detailed formal plan approved by the Group’s management, the cost of acquiring and integrating companies acquired by the Group, including earn-outs comprising conditions of presence, and the effects of curtailments, settlements and transfers of defined benefit pension plans.
Normalized net profit is equal to profit for the year (Group share) adjusted for the impact of items recognized in “Other operating income and expense”, net of tax calculated using the effective tax rate. Normalized earnings per share is computed like basic earnings per share, i.e., excluding dilution.
Organic free cash flow is equal to cash flow from operations less acquisitions of property, plant, equipment and intangible assets (net of disposals) and repayments of lease liabilities, adjusted for cash out relating to the net interest cost.
Net debt (or net cash) comprises (i) cash and cash equivalents, as presented in the Consolidated Statement of Cash Flows (consisting of short-term investments and cash at bank) less bank overdrafts, and also including (ii) cash management assets (assets presented separately in the Consolidated Statement of Financial Position due to their characteristics), less (iii) short- and long-term borrowings. Account is also taken of (iv) the impact of hedging instruments when these relate to borrowings, intercompany loans, and own shares.
RESULTS BY REGION
Revenues | Year-on-year growth | Operating margin rate | |||||
2023 (in millions of euros) | reported | at constant exchange rates | 2022 | 2023 | |||
6,462 | -4.1% | -1.3% | 15.6% | 15.6% | |||
2,709 | +5.8% | +7.9% | 18.0% | 18.6% | |||
4,537 | +6.1% | +6.1% | 12.1% | 12.6% | |||
Rest of | 6,837 | +6.2% | +7.6% | 11.6% | 11.7% | ||
1,977 | -0.4% | +4.6% | 10.6% | 12.2% | |||
TOTAL | 22,522 | +2.4% | +4.4% | 13.0% | 13.3% |
RESULTS BY BUSINESS
Total revenues* | Year-on-year growth | ||
2023 (% of Group revenues) | At constant exchange rates in Total revenues* of the business | ||
Strategy & Transformation | 9% | +8.6% | |
Applications & Technology | 62% | +4.5% | |
Operations & Engineering | 29% | +2.8% |
SUMMARY INCOME STATEMENT AND OPERATING MARGIN
(in millions of euros) | 2022 | 2023 | Change |
Revenues | 21,995 | 22,522 | +2.4% |
Operating expenses | (19,128) | (19,531) | |
Operating margin | 2,867 | 2,991 | +4% |
as a % of revenues | 13.0% | 13.3% | |
Other operating income and expense | (474) | (645) | |
Operating profit | 2,393 | 2,346 | -2% |
as a % of revenues | 10.9% | 10.4% | |
Net financial expense | (129) | (42) | |
Income tax income/(expense) | (710) | (626) | |
Share of profit of associates | (4) | (10) | |
(-) Non-controlling interests | (3) | (5) | |
Profit for the period, Group share | 1,547 | 1,663 | +7% |
NORMALIZED AND DILUTED EARNINGS PER SHARE
(in millions of euros) | 2022 | 2023 | Change |
Average number of shares outstanding | 170,251,066 | 171,350,138 | |
BASIC EARNINGS PER SHARE (in euros) | 9.09 | 9.70 | +7% |
Diluted average number of shares outstanding | 176,019,736 | 177,396,346 | |
DILUTED EARNINGS PER SHARE (in euros) | 8.79 | 9.37 | +7% |
(in millions of euros) | 2022 | 2023 | Change |
Profit for the period, Group share | 1,547 | 1,663 | +7% |
Effective tax rate | 28.1% | 27.2% | |
(-) Other operating income and expense, net of tax | 340 | 469 | |
Normalized profit for the period | 1,887 | 2,132 | +13% |
Average number of shares outstanding | 170,251,066 | 171,350,138 | |
NORMALIZED EARNINGS PER SHARE (in euros) | 11.09 | 12.44 | +12% |
In 2022, the Group recorded a tax expense of €73 million related to the impact of the US tax reform. Taking into account the average number of shares outstanding, this represented an amount of €0.43 per share. Adjusted for this tax expense, normalized earnings per share were therefore €11.52.
CHANGE IN CASH AND CASH EQUIVALENTS AND ORGANIC FREE CASH FLOW
(in millions of euros) | 2022 | 2023 |
Net cash from operating activities | 2,517 | 2,525 |
Acquisitions of property, plant and equipment and intangible assets, net of disposals | (283) | (254) |
Net interest cost | (71) | (11) |
Repayments of lease liabilities | (311) | (297) |
ORGANIC FREE CASH FLOW | 1,852 | 1,963 |
Other cash flows from (used in) investing and financing activities | (1,118) | (2,126) |
Increase (decrease) in cash and cash equivalents | 734 | (163) |
Effect of exchange rate fluctuations | (58) | (115) |
Opening cash and cash equivalents | 3,119 | 3,795 |
Closing cash and cash equivalents | 3,795 | 3,517 |
NET DEBT
(in millions of euros) | ||
Cash and cash equivalents | 3,802 | 3,536 |
Bank overdrafts | (7) | (19) |
Cash and cash equivalents | 3,795 | 3,517 |
Cash management assets | 386 | 161 |
Long-term borrowings | (5,655) | (5,071) |
Short-term borrowings and bank overdrafts | (1,102) | (675) |
(-) Bank overdrafts | 7 | 19 |
Borrowings, excluding bank overdrafts | (6,750) | (5,727) |
Derivative instruments | 3 | 2 |
(2,566) | (2,047) |
ESG PERFORMANCE
See appendix in the press release attached (PDF)
Note 1: In the table above, 2023 data may include some estimates and some historical data are restated to ensure comparability.
Note 2: Employee commuting and business travel emissions increase in 2023 year-on-year is due to post-pandemic gradual return to the office and travel.
1 Audit procedures on the consolidated financial statements have been completed. The auditors are in the process of issuing their report.
2 Corresponding to Scopes 1 and 2, and Scope 3 including emissions linked to employee commuting and business travel but excluding those from purchased goods and services.
3 Note that in the appendix, certain totals may not equal the sum of amounts due to rounding adjustments.
In
Attachments
Capgemini _-_2024-02-14_-_2023_Annual_Results- Capgemini_FY_Q42023_infographics_ENG
- Capgemini_FY23_infographics_ESG
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