Shares surge for French IT group Capgemini

24th February 2005, Comments 0 comments

PARIS, Feb 24 (AFP) - Shares in French information technology services group Capgemini stormed ahead of the pack Thursday as the market hailed its outlook for a hefty jump in operating profit margin for 2005, dealers said.

PARIS, Feb 24 (AFP) - Shares in French information technology services group Capgemini stormed ahead of the pack Thursday as the market hailed its outlook for a hefty jump in operating profit margin for 2005, dealers said.

Capgemini shares soared 6.52 percent to EUR 27.79 euros in midday trades on the Paris stock exchange, while the CAC 40 index of leading shares was 0.14 percent lower overall.

The company had earlier beat its own guidance for its operating margin in the second half of 2004 and said it expects a "marked improvement" in 2005.

Second-half margin came in at 2.35 percent driven by European operations, exceeding the group's forecast of two percent.

"Results were finally as expected, with a second-half margin of 2.35 percent compared with the consensus of 1.9 percent," JP Morgan analysts said.

"While we still have to get through the conference call without any 'bombs', results continue to meet the expected milestones and as such we expect shares to react positively," they said.

As for sales, Societe Generale analysts said Capgemini's outlook for 2005 sales growth of 10 percent is at the higher end of their forecast of 5-10 percent growth.

The French IT group had reported a net loss of EUR 359 million for 2004, heavier than its 2003 loss of EUR 197 million.

The results were largely owing to one-off items, however, such as a tax charge of EUR 125 million and restructuring costs of EUR 220 million.

Sales in 2004 increased 9.3 percent to EUR 6.2 billion, while operating profit plunged 62.6 percent to EUR 58 million.

Analysts said a major disappointment was the group's US operations, which were loss-making once again in the second half.

"What seems like never ending restructuring continues in the region," Societe Generale analysts said.

Fideuram Wargny analysts said the company's operating profit was higher than their own estimate of EUR 45 million.

However, they warned that "there is no improvement in the US unit despite a marked pick-up in IT investments in the region in 2004."

© AFP

Subject: French News

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