EuroBusiness Media (EBM): Capgemini, one of the top IT services vendors in Europe and the world’s foremost provider of consulting, technology and outsourcing services, today announces its full-year results for the year 2017. Paul Hermelin, hello. You are the Chairman and CEO of Capgemini, what are the highlights of these full-year results?
Paul Hermelin: We delivered a truly excellent performance this year, because we combined growth and margin improvement. In top line, an acceleration throughout the year and we completed the year with a 4% constant currency growth, which is more than our guidance and we ended the year with the fourth quarter above 6%. So good acceleration. Margin progression, as expected, we met the guidance, a new progression of the margin to reach 11.7%. Excellent cash collection; we completed a good free cash flow operation this year, at €1 billion and €80 million, which is above our guidance, and overall a very solid year.
EBM: You’re certainly operating in a healthy demand environment these days, with strong growth predicted for both North America and continental Europe. What is driving this?
Paul Hermelin: The market is very active because a lot of new clients are buying technology, notably the business, not only the IT department. That’s what we call the digital evolution of the market. And by year-end, the digital and cloud will represent 40% of our group revenue, which is a sizeable part, we are close to €5 billion of digital work and it’s growing by 24%. Second point, in the US you might remember that we ended on a low base at the end of 2016, we recorded good growth throughout the year – 5% growth in the US – and we ended the year at +12%. All countries in continental Europe are growing and one limit is in the UK where we completed successful the re-insourcing of our contract with Revenue and Customs, but I would just say we have kept and we have developed the best operational relationship, so it remains and will remain for a long time our best client.
EBM: And how is the growth outlook for Capgemini and the rest of the world, particularly in emerging markets?
Paul Hermelin: On the combined Asia Pacific and Latin America, we grew by 7.9%, so nearly 8%, which is quite solid. Good growth in Asia Pacific, stellar growth in Mexico and Brazil for the first time shows signs of stabilisation at the end of 2017.
EBM: And you’ve made a few strategic acquisitions in the past year. What else is on the horizon?
Paul Hermelin: The first point is that on that digital journey, we buy assets that are important for the customer experience, so for the first time we onboard new kinds of talents, creative people, designers, all skills that are important for what we call the customer journey. So, we bought Fahrenheit 212 last year, which is about innovation, consulting in innovation. We bought a big studio specialised in design, Idean and we started the negotiation obviously in 2017 and we could sign ten days ago, a big acquisition in digital with LiquidHub, which is a key company with big clients in capital markets, in healthcare, in health players. So, a big step for us to grow in the US in digital.
EBM: Your press release shows a strong angle towards CSR. Can you comment on this?
Paul Hermelin: We made an effort to redesign our CSR objective. We completely reorganised our objectives and I presented them with a CSR executive to the board that endorsed our proposal. There are two chapters that are quite traditionally normal. One would be about gender diversity and a promotion and the growing importance of ladies in the group management and organisation. The second one is about environmental sustainability, so our carbon footprint and energy consumption. We have pushed for something on top, which I think is radically new, which is to progressively focus all our efforts towards digital inclusion. The digital divide is a big break in the society. There are people that are part of the digital world and people that are not and we, as a promoter of that digital age, we will do whatever we can to encourage people to have access to that digital age by working on digital inclusion.
EBM: You have issued some pretty ambitious growth and margin targets through 2020, what is your guidance for the coming year?
Paul Hermelin: On our road to our strategy objective, our strategic ambition is to grow organically by 5 to 7% and to push our margin to the range 12.5 -13%. 2018 will see a new progression, so we will guide on 6 to 7% constant currency growth, a new progression of the margin to a range of 12 to 12.2% and a new good free cash flow collection, since we want to be above €1 billion.
EBM: Paul Hermelin, Chairman and CEO of Capgemini, thank you very much indeed.
Paul Hermelin: Goodbye.
