EuroBusiness Media (EBM): Capgemini, one of the world’s foremost providers of Consulting, Technology and Outsourcing Services, reports results for 2013. Paul Hermelin, welcome. You are the Chairman & CEO of Capgemini. Before we discuss your plans for 2014, how did Capgemini perform in 2013?
Paul Hermelin: Definitely a good year. It was a challenging year. We started the year with a revenue decline and we had committed for growth. So we had to accelerate throughout the year and we did. So I’m quite happy to report that the fourth quarter helped us to meet the guidance. The organic growth of the Group will be 0.9%, close to 1% as in 2012, but it was a constant increase: we declined by 1.7%, then nearly flat, then a slight growth, and we ended the year on a very positive momentum since we grew in the fourth quarter by 3.9%. So, a good year of acceleration. That helped us deliver a good margin, a solid margin progression. We reached 8.5%, which is a little more than the guidance. We increased our margin by 40 bps; we had committed for 30 bps, so slightly more. And this in spite of no restructuring charges – let’s be more honest, €80 million, it’s a sharp reduction of our restructuring charges – which led to a good operating result. Thanks to that, we have a good progression of the net income of the Group. So overall, a quite solid year.
EBM: You’ve recently announced the creation of a new Global Service Line called Digital Customer Experience. How did the market or clients react and how will it contribute to growth?
Paul Hermelin: The first point, what is noticed, is that we can raise slightly our growth margin and resist on price thanks to innovation. There is a secular trend of commoditisation that could lead to erosion, and we resisted through innovation. Digital Customer Experience is the main innovation of the year. It relates to all the new channels that the customers have available and that could be managed by the company. It’s mainly very visible in Retail and Consumer Goods, but it expands into Finance, and it will probably progressively reach all the sectors. So I expect that to grow rapidly. It’s the new, newly born TLI, Top Line Initiative. So today we have mature ones like BI, Big Data or Testing. So this is the newly born one and it will grow very rapidly.
EBM: What are your plans to take advantage of the recovery in the US? Any new acquisitions or market specific offerings?
Paul Hermelin: First point is that we didn’t start the year as well as we thought or as well as we should have. But I’m happy to report that in the fourth quarter we grew by nearly 8.7%-8.9%. We have recovered a healthier situation in North America. I hope that the year 2014 will confirm that recovery. So we have some ambition in North America, organically. But we have some very healthy units there. We look there for acquisitions: we would be delighted to expand our market share there and grow the share of North America in our mix. But acquisitions are expensive, we will be prudent. Nevertheless, it’s a strategic ambition.
EBM: When looking at other geographies, what countries do you expect to contribute more to growth in 2014?
Paul Hermelin: The first point is that, as everybody would imagine, we expect to grow in Asia and Latin America, of course. But I want us to resist in Europe, too. I think we can gain market share. We have a very strong offshore strength and presence, and these nearly 57,000 people offshore, so we should be one of the winners. I would like us to beat the market and slightly grow in Europe. That’s more an ambition. Of course, it will depend on the European economic environment, but we can and we will gain market share in Europe.
EBM: You've decided to propose to the Shareholders’ Annual General Meeting the payment of a €1.1 dividend. This is more than usual. Why is that?
Paul Hermelin: Historically, the pay-out ratio has been 35%. At €1, it would have been just in line with that historical ratio, but the dividend had reached €1 in 2007; actually, in 2008 for the year 2007. And I really think that, six years later, the Group does not look as it looked six years ago. We are now truly rated as a global leader; we have reached my dream of playing in what I call the Champion’s League; we are clearly seen as having mastered offshore, a big player in innovation. So I just wanted to show status, a little change. The pay-out ratio will be 40%. I think the progression of our earnings will go further, so we could afford a little in direction of the shareholders and get to a dividend of €1.1, which is a 10% increase after six years.
EBM: And finally, what is your outlook and guidance for 2014?
Paul Hermelin: The first point is that we think the year will be better. Nevertheless, we guide certainly with a kind of wide range, because we are not sure about Europe. So we guide for a growth between 2% and 4%; it will depend on the European outlook. We guide for the margin’s further progression: we want to reach 8.8%-9%. And we guide for another good year of cash generation: we want to have a free cash flow that will exceed €500 million.
EBM: Paul Hermelin, Chairman & CEO of Capgemini, thank you very much.
Paul Hermelin: Thank you Adrian.
