Acquisitions and revenue growth cap busy month at Capgemini

26 February 2020 Consultancy.asia

As Capgemini continues to make new acquisitions worldwide, the tech-minded professional services firm has this month reported 2019 financial year revenues of €14.1 billion.

French-origin professional services firm Capgemini has had one of the bigger months in the company’s 50-year history. Over the past four weeks the firm has convinced a majority of Altran shareholders to accept its final takeover offer, at a valuation worth €3.7 billion, and followed that up with the purchase of US-based social impact consultancy Purpose and Swedish data firm Advectas. In addition, Capgemini has this month posted 2019 revenues of €14.1 billion, up by 7 percent.

“With the strong 2019 performance we continue the momentum started several years ago,” said CEO Paul Hermelin in a joint statement together with COO Aiman Ezzat, who is preparing to take over the helm in May as the firm moves to split its chair and chief executive roles. “With this good set of results, we start 2020 on a solid footing,” the pair continued. “We can rely on a strong backlog, and on our ability to win major projects, as demonstrated in 2019.”

With growth last year in excess of 20 percent, Capgemini’s digital and cloud business now accounts for more than half of the firm’s revenues, while its strategy & transformation offering – since late 2018 grouped under the banner Capgemini Invent – grew by over 15 percent at constant rates, albeit contributing only around 7 percent of overall revenues. The firm’s third major line, Operations & Engineering, grew by 4.9 percent for a 22 percent share.

Meanwhile, the firm’s combined Asia Pacific and Latin America geography was one its star performers for 2019, cited for the ‘particularly dynamic’ growth of 12.8 percent. While now breaking the €1 billion barrier, the geography still has a long way to go however before it reaches the heights of Capgemini’s European stronghold, with its French, Europe, and UK & Ireland divisions (all up by around 5 to 6 percent) combining for 60 percent of the revenue tally.

Capgemini results in 2019

As a breakdown by sector, the firm has a relatively even spread, although the financial services and manufacturing segments combine for close to half Cagemini’s current business. Listed in ascending order, its telecoms, media & technology (TMT), energy & utilities, public sector, and consumer goods & retail practices meanwhile range from between an 8 and 14 percent share – with energies & utilities, manufacturing, and ‘services’ the firm’s fastest growth lines.

Looking ahead, the firm expects ongoing growth of around 4 percent (at constant rates) for 2020, although notes that this outlook doesn’t factor in the impact of the Altran acquisition, with the engineering and innovation consultancy also this month reporting revenues pushing above the €3.2 billion mark. As it stands, Capgemini has captured approximately 54 percent of Altran’s shares, with the firm restating its determination to expand in the “Intelligent Industry” market.

“This proposed combination enables Capgemini to take the lead in a very promising market segment – what we call ‘Intelligent Industry’ or the digital transformation of industrial and tech companies,” Hermelin said on the original announcement. “By joining forces, we are positioning ourselves as a clear strategic partner to assist our clients in taking full advantage of the revolution created by the developments of the cloud, Edge computing, IoT, artificial intelligence and 5G.”

This jockeying comes at a pivotal time for the firm as to its leadership transition, with Hermelin to hand over CEO duties after 18 years in the role, continuing on his current dual position of chairman. Ezzat however has across two stints spent nearly two and a half decades at the firm, notably including a period as Global Head of Oil, Gas and Chemicals. Since returning in 2002, the current COO has also held roles as CFO and Deputy Director of Strategy.

If all that seems like a rather hectic period at Capgemini, it appears the firm has little intention of slowing down, also last week announcing the acquisition of Scandinavian business intelligence and data science consultancy Advectas. Made for an undisclosed sum, the deal will see the company added to Capgemini’s Insights & Data practice, with around 200 or so professionals added to the Capgemini’s global headcount of 220,000, which grew by 3.8 percent last year.