Capgemini, the French consulting and technology company, changed its 2024 revenues target for the second time for the year because of weak third-quarter sales. Some of the ongoing issues include, ongoing challenges mostly felt in the manufacturing industries which influenced overall performance and made the firm revise its growth forecast for the year.

Highlights:

• Q3 2024 Revenue is €5.38 billion, a decrease of 1.6% year-on-year at constant exchange rates.
• The revised 2024 Forecast expects revenue to decline by 2.0% to 2.4%.
• Operating Margin Target is adjusted to 13.3%–13.4%.
• The full-year Free Cash Flow target remains around €1.9 billion.

Capgemini announced total Q3 2024 sales of €5.38 billion, a 1.6% decline in constant exchange rates, as markets remained weak in numerous major sectors, especially manufacturing. For this reason, the business has lowered the revenue growth forecast of the business in 2024 to -2.0% – -2.4% from -0.5% – -1.5%. The guidance for operational margin has been lowered from 13.3%% to 13.4 % and there is no change in the Free Cash Flow target of approximately 1.9 billion Euros.

Revenue trends varied across Capgemini's core markets:

• North America saw a 3.9% decline mainly due to lower Consumer Goods, Retail, Consumer Energy, and Public sectors.
• UK & Ireland region was up by only 0.4% mainly due to Energy & Utilities sectors.
• France saw a 2.5% dip in revenue growth and the manufacturing sector decline negated the improvement in Public and Telecom business.
• The rest of Europe was slightly higher at 0.6%, primarily driven by the Financial Services sector and Energy & Utilities.
• Region-wise, Asia-Pacific and Latin America fell by 2.2% due to weak performance in the Consumer Goods and Manufacturing sectors.

The demand for affordable digital products and services, primarily Cloud and AI, remained high among clients. The Manufacturing sector remained under pressure while Financial Services, though advanced marginally, recorded year-on-year declines.

Capgemini CEO Aiman Ezzat said that there has been a gradual improvement in some sectors of the company and highlighted the planned work on improving productivity. He also pointed to clients’ desire for artificial intelligence and generative artificial intelligence services that corporations look for ways to optimize and cut costs.

Demand for Capgemini’s Strategy & Transformation Services grew by 6.5% as clients pursued digital transformation and sustainable operations. Applications & Technology Services showed improvement compared to previous quarters, while Operations & Engineering Services faced a 3.4% decline due to weaker demand for infrastructure support.

Capgemini expects a similar growth trend for Q4, with slight improvements in sectors like Financial Services and easing pressures in Tech and Telecom. Nonetheless, the company is still optimistic and has left the expectations of incremental free cash flow organic growth – of €1.9 billion for the financial year intact.