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Capgemini reports profit slump, lowers sales target

Capgemini reports profit slump, lowers sales target
AFP
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First Published: Thu, Jul 30 2009. 05 05 PM IST
Updated: Thu, Jul 30 2009. 05 05 PM IST
Paris: French computer services consultancy Capgemini reported a big drop in first-half net profit, and said on Thursday it was lowering its forecasts for sales this year.
The results for the first half were in line with its objectives, but net profit slumped to €78 million ($109.2 million) from €231 million in the equivalent period of last year.
The operating margin fell by one percentage point to 6.6% of sales. The company had counted on a figure above 6.5%.
Sales were almost steady at €4.376 billion from €4.374 billion in the first six months of last year. On the basis of constant exchange rates, they fell by 2.2%, as forecast.
Managing director Paul Hermelin said: “Overall, it is a good performance and altogether in line with the commitments we made in February, even though the market deteriorated slightly during the six months.”
He said that the slump in net profit reflected “more rapid restructuring of the group and a tax charge” which had increased.
Analysts had forecast sales of €4.371 billion, a net profit of €124 million and an operating margin of 6.6%, on the basis of a consensus by Societe Generale and CM-CIC Securities.
The company said that for this year it now expected sales to fall by 3-4% at constant exchange rates and on a like-for-like basis. The previous forecast had been for a fall of 2%.
Hermelin said that the company was “more cautious than some of our competitors” because “we are worried about the fourth quarter.”
There were signs of stabilisation in some regions, in North America for exemple, and some sectors were showing renewed signs of life such as the financial sector, but it was not possible to say if these signs were strong or stable.
He said that under such circumstances “our top priority is to preserve our margins” which were expected to be about 7% from 8.5% in 2008.
Capgemini said that it expected conditions to be slightly better, but still sluggish, next year.
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First Published: Thu, Jul 30 2009. 05 05 PM IST