Capgemini cuts forecast, shares tumble amid weak demand

PARIS - Capgemini SE (EURONEXT:CAP) shares fell 6.4% after the IT services and consulting firm lowered its full-year revenue growth forecast, citing weaker-than-expected demand in some sectors, particularly manufacturing.

The company now expects revenue to decline 2.0% to 2.4% at constant currency for fiscal year 2024, compared to its previous guidance of a 0.5% to 1.5% drop. Capgemini also narrowed its operating margin target to 13.3% to 13.4% from 13.3% to 13.6% previously, while maintaining its organic free cash flow forecast of around €1.9 billion.

For the third quarter, Capgemini reported revenue of €5.38 billion ($5.69 billion), down 1.6% YoY at constant exchange rates. This marks a slight improvement from the second quarter, but still reflects ongoing challenges in the IT services market.

"Our growth improved marginally in Q3 compared to Q2, despite stronger headwinds than anticipated in some sectors, primarily in Manufacturing," said CEO Aiman Ezzat. He noted that while Financial Services showed signs of recovery, the Telecommunications and Technology sectors continued to face headwinds, albeit to a lesser extent.

The company's book-to-bill ratio for Q3 stood at 0.97, with bookings totaling €5.22 billion, down 0.8% at constant exchange rates. Capgemini reported growing demand for its Cloud and Data & AI/GenAI services, as well as digital core modernization and intelligent supply chain solutions.

Despite the challenging environment, Ezzat emphasized the company's efforts to adapt, stating, "We are also launching a set of targeted actions to simplify our operations to make the Group more agile with a stronger emphasis on growth."

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Source: Investing.com