By Najat Kantouar

Capgemini shares fell after the French company said it remains cautious on its outlook and reported lower revenue as customers were slow to make spending decisions.

The consulting and technology group said Tuesday that it is confronting an uncertain environment, particularly in the manufacturing sector and in Europe. The company forecast its revenue performance excluding currency movements for the first half of 2025 would be in line with the 1.1% decline it posted for last year's fourth quarter.

In European morning trading, shares in Capgemini were down about 9.3%. If maintained until close, this would represent the stock's biggest one-day percentage drop since March 2020, at the outbreak of the pandemic. Shares have risen 6.3% year to date.

Consulting companies like Capgemini, Accenture and Infosys have been hurt by sluggish client spending over the past few quarters. Capgemini said the environment proved weaker than initially anticipated last year, but that a shift in its portfolio toward higher-value services helped it protect profitability.

The company said it anticipates full-year revenue at constant currency rates to range from a 2% fall to a 2% rise, and targets an operating margin between 13.3% to 13.5%.

Capgemini's full-year guidance looks conservative, Jefferies analysts wrote in a note. "Having misjudged the speed of market recovery in 2024, we can understand the rationale for starting 2025 on a more conservative footing," the analysts said.

For 2024, group posted a 0.5% rise in net profit to 1.67 billion euros, equivalent to $1.75 billion, from 1.66 billion euros for the same period a year earlier. This compared with market consensus of 1.69 billion euros based on 13 analysts taken from FactSet.

Operating profit increased to 2.36 billion euros from 2.35 billion euros, while operating margin was flat at 13.3%.

Revenue fell to 22.10 billion euros from 22.52 billion euros. The consensus stood at 22.05 billion euros, according to FactSet-provided estimates.

In the fourth quarter, revenue totaled 5.58 billion euros, falling 1.1% on a constant-currency basis. Capgemini said revenue trends gradually improved throughout the year after bottoming out in the first quarter.

Bookings rose 1.9% in the fourth quarter, but the company said clients are still taking a long time to make decisions. Generative artificial intelligence services accounted for 5% of the company's bookings in the quarter, it said.

The group declared a dividend of 3.40 euros a share, flat from a year earlier.

Write to Najat Kantouar at najat.kantouar@wsj.com

(END) Dow Jones Newswires

February 18, 2025 05:09 ET (10:09 GMT)

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