Capgemini surprises with profit jump, sees slowdown ahead

15th February 2008, Comments 0 comments

French computer services consultancy Capgemini reported 2007 results on Thursday that beat market exepctations

   PARIS, February 15, 2008 - French computer services consultancy Capgemini
reported 2007 results on Thursday that beat market exepctations, but the group
warned of a possible slowdown this year because of a crisis in the banking
sector.
   The company, a leader in its sector in Europe, said net earnings came to
440 million euros (642 million dollars), a 50-percent gain over 2006 and
leaving an operating margin of 7.4 percent compared with 5.8 percent in 2006.
   Sales rose 13 percent to 8.7 billion euros.
   Analysts had foreseen net profit of 391 million euros and sales of 8.73
billion, with an operating margin of 7.2 percent.
   The earnings news cheered investors, with Capgemini shares showing a gain
of 9.21 percent at 37.46 euros in mid-afternoon trade on a generally stronger
Paris market.
   But Capgemini said in a statement said it expected a weaker level of
activity in 2008, while reaching an operating margin of 8.5 percent.
   "It is possible that the difficulties in the banking sector will spread to
the rest of the economy and affect our own activities, even if so far there
have been no repercussions," the statement said.
   Banks in Europe and the United States have been hit with heavy losses from
a crisis in the US subprime mortgage market, where a wave of foreclosures has
undermined the value of billions of dollars' worth of mortgage-backed
securities.
   That in turn has sparked a credit crisis, with banks reluctant to lend
money among themselves.

AFP 

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