capgemini
Capgemini
UK profits nearly halved in 2017, with the consulting and IT services group blaming the fall on currency losses linked to weaker sterling, as well as restructuring costs. The French-listed consultancy’s UK profits fell 48 per cent last year to £62m — its weakest annual performance in five years, according to filings submitted to Companies House last week. Capgemini, which employs 7,838 staff across the UK, blamed the fall partly on currency movements following the UK’s vote to leave the EU, which resulted in an £18m loss for the firm, compared with a £20.6m gain in the previous year. Profits were also hit by restructuring costs of £16.5m linked to a “rationalisation programme” that involves staff cuts in certain areas, the company said. It declined to comment on how many redundancies it planned to make. Despite the profit fall, the best-paid director at the firm received a 5 per cent pay rise last year, bringing total pay to £653,000. The unnamed director also received a £1.4m bonus consisting of shares in the company, a change from 2016 when no shares were paid out. The company said that revenues at its broader UK and Ireland business had been affected by HM Revenue & Custom’s decision to bring its long-running contract for IT services, known as Aspire, partially in-house. This contract had cost the tax authority around £700m a year. Capgemini said that the consultancy expected the region “to return to growth” in the second half of 2018. In the UK, its revenues from outsourcing fell slightly year on year, although this was compensated for by a near-doubling in revenues from technology services. The parent company’s full-year results, published in March, showed that Capgemini reported revenue growth in every major geographic region in 2017 apart from the UK and Ireland. Paul Hermelin, Capgemini’s chairman and chief executive, said at the time that the weaker performance in the UK and Ireland reflected a decline in public sector work and “a market that looks pretty soft with the consequences of Brexit”. Capgemini’s UK results came shortly after rival consultancy Accenture posted similar declines in the UK. Accenture said last month that its UK profits nearly halved last year after the US-listed consultancy was forced to account for a £77m payment to HM Revenue & Customs following a probe into its tax affairs over an eight-year period. The charge meant that even though Accenture’s UK revenues and profits before tax increased in 2017, net profits fell from £125m to £67m.
cloud computing
Capgemini on Thursday said companies’ demand for digital and cloud services was fuelling its growth, as the French IT services group unveiled its full-year results for 2017. Digital and cloud revenues were up 24 per cent year on year at constant exchange rates, reaching almost €5bn and fuelling overall revenue growth of 4 per cent to €12.8bn during 2017. The group’s net profit grew 11 per cent to €820m. “What used to drive the IT services market was offshoring to countries like India,” said Paul Hermelin, Capgemini’s chairman and chief executive. “Today, the major shift is companies’ digital transformation.” The strongest demand for digital and cloud services was from clients in the consumer, retail, financial services and manufacturing sectors, he added. Competitors of Capgemini, which provides consulting and IT services, range from the likes of Accenture to the re-emergence of the consulting arms of the “Big Four” professional services firms, as well as smaller niche players. The group has been expanding the business with bolt-on acquisitions, announcing this month a €400m acquisition of LiquidHub, a US-based digital transformation specialist focused on customer engagement. “ There’s a convergence between traditional IT services companies and marketing agencies,” says Jonathan Brassington, chief executive of LiquidHub. “Firms with the ability to bring capabilities in both of these spaces are positioned to be winners.” What used to drive the IT services market was offshoring to countries like India. Today, the major shift is companies’ digital transformation Paul Hermelin, chief executive of Capgemini Analysts last year highlighted Accenture and Capgemini as potential buyers for advertising agencies such as Publicis or WPP. Mr Hermelin said in October that Capgemini could be pushed towards a deal in the advertising sector if rival Accenture made a takeover in the industry. Speaking on Thursday he sounded less convinced: “All of the large agencies are exposed to their industry pressures. It’s safer for us to buy niche players that are easier to integrate.” Mr Hermelin says he is seeing a big shift in Europe from companies using IT to cut costs to companies spending money on technology to drive growth. All of Capgemini’s major geographic regions reported revenue growth in 2017, apart from the UK and Ireland, where revenues fell 9.6 per cent year on year at constant exchange rates. This reflects a decline in the public sector and “a market that looks pretty soft with the consequences of Brexit”, Mr Hermelin said. Capgemini said on Thursday that it aimed to increase revenues 6-7 per cent in 2018 at constant exchange rates.
UK profits nearly halved in 2017, with the consulting and IT services group blaming the fall on currency losses linked to weaker sterling, as well as restructuring costs. The French-listed consultancy’s UK profits fell 48 per cent last year to £62m — its weakest annual performance in five years, according to filings submitted to Companies House last week. Capgemini, which employs 7,838 staff across the UK, blamed the fall partly on currency movements following the UK’s vote to leave the EU, which resulted in an £18m loss for the firm, compared with a £20.6m gain in the previous year. Profits were also hit by restructuring costs of £16.5m linked to a “rationalisation programme” that involves staff cuts in certain areas, the company said. It declined to comment on how many redundancies it planned to make. Despite the profit fall, the best-paid director at the firm received a 5 per cent pay rise last year, bringing total pay to £653,000. The unnamed director also received a £1.4m bonus consisting of shares in the company, a change from 2016 when no shares were paid out. The company said that revenues at its broader UK and Ireland business had been affected by HM Revenue & Custom’s decision to bring its long-running contract for IT services, known as Aspire, partially in-house. This contract had cost the tax authority around £700m a year. Capgemini said that the consultancy expected the region “to return to growth” in the second half of 2018. In the UK, its revenues from outsourcing fell slightly year on year, although this was compensated for by a near-doubling in revenues from technology services. The parent company’s full-year results, published in March, showed that Capgemini reported revenue growth in every major geographic region in 2017 apart from the UK and Ireland. Paul Hermelin, Capgemini’s chairman and chief executive, said at the time that the weaker performance in the UK and Ireland reflected a decline in public sector work and “a market that looks pretty soft with the consequences of Brexit”. Capgemini’s UK results came shortly after rival consultancy Accenture posted similar declines in the UK. Accenture said last month that its UK profits nearly halved last year after the US-listed consultancy was forced to account for a £77m payment to HM Revenue & Customs following a probe into its tax affairs over an eight-year period. The charge meant that even though Accenture’s UK revenues and profits before tax increased in 2017, net profits fell from £125m to £67m.
cloud computing
Capgemini on Thursday said companies’ demand for digital and cloud services was fuelling its growth, as the French IT services group unveiled its full-year results for 2017. Digital and cloud revenues were up 24 per cent year on year at constant exchange rates, reaching almost €5bn and fuelling overall revenue growth of 4 per cent to €12.8bn during 2017. The group’s net profit grew 11 per cent to €820m. “What used to drive the IT services market was offshoring to countries like India,” said Paul Hermelin, Capgemini’s chairman and chief executive. “Today, the major shift is companies’ digital transformation.” The strongest demand for digital and cloud services was from clients in the consumer, retail, financial services and manufacturing sectors, he added. Competitors of Capgemini, which provides consulting and IT services, range from the likes of Accenture to the re-emergence of the consulting arms of the “Big Four” professional services firms, as well as smaller niche players. The group has been expanding the business with bolt-on acquisitions, announcing this month a €400m acquisition of LiquidHub, a US-based digital transformation specialist focused on customer engagement. “ There’s a convergence between traditional IT services companies and marketing agencies,” says Jonathan Brassington, chief executive of LiquidHub. “Firms with the ability to bring capabilities in both of these spaces are positioned to be winners.” What used to drive the IT services market was offshoring to countries like India. Today, the major shift is companies’ digital transformation Paul Hermelin, chief executive of Capgemini Analysts last year highlighted Accenture and Capgemini as potential buyers for advertising agencies such as Publicis or WPP. Mr Hermelin said in October that Capgemini could be pushed towards a deal in the advertising sector if rival Accenture made a takeover in the industry. Speaking on Thursday he sounded less convinced: “All of the large agencies are exposed to their industry pressures. It’s safer for us to buy niche players that are easier to integrate.” Mr Hermelin says he is seeing a big shift in Europe from companies using IT to cut costs to companies spending money on technology to drive growth. All of Capgemini’s major geographic regions reported revenue growth in 2017, apart from the UK and Ireland, where revenues fell 9.6 per cent year on year at constant exchange rates. This reflects a decline in the public sector and “a market that looks pretty soft with the consequences of Brexit”, Mr Hermelin said. Capgemini said on Thursday that it aimed to increase revenues 6-7 per cent in 2018 at constant exchange rates.
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