France’s Capgemini 2022 margin growth likely capped by costs

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The logo of Capgemini is seen at the company's headquarters in Paris

-Gains in French IT consultancy Capgemini’s operating margin this year will likely be held back by inflationary pressures on salary and the cost of returning to offices, the company said after reporting robust results on Monday.

The firm, which offers its services to industries ranging from telecommunications to aerospace, expects a 2022 operating margin of 12.9% to 13.1% and revenue growth of 8%-10% at constant currency.

For 2021, it posted an operating margin of 12.9%, back at pre-pandemic levels, on revenue of 18.16 billion euros ($20.52 billion), up 15.1% at constant currency.

Capgemini said margin improvements would be reined in by salary inflation and as the company anticipates higher costs from the return of workers to the office and increased travelling, Chief Executive Aiman Ezzat said during a call.

Europe’s tech index has climbed about 32% in 2021, hitting all-time highs since the dot-com bubble in 2000, while Capgemini surged nearly 70% last year.

However, since the beginning of the year, the pan-European tech sub-index has dived 15% amid higher rate expectations and inflation concerns.

Capgemini a strong year in 2021 which was allowed by “the acceleration of the digital transformation of large companies and organizations and investments (…) made in offerings”, Ezzat said.

“The cloud and data are priorities for companies and we are very well positioned on those markets,” he added.

(Reporting by Kate EntringerEditing by Bernadette Baum)

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