Capgemini Hikes Dividend After Boost in Profit — Update

By Mauro Orru

Capgemini is raising its dividend after posting higher profit and revenue for 2023, a year marked by what Chief Executive Aiman Ezzat said was a slowdown in the industry.

The French consulting and technology group said Wednesday that annual net profit had increased 7% on year to 1.66 billion euros ($1.78 billion). Operating profit--the company's preferred measure of profitability--rose to EUR2.99 billion from EUR2.87 billion in 2022, generating a 13.3% margin.

Shares in Paris jumped more than 5% in morning trading.

The company said it would recommend a dividend of EUR3.40 per share at its May 16 shareholders' meeting, above the EUR3.25 per share it proposed last year. The group also said it would propose renewing Ezzat's term of office as director for four years and confirm him as chief executive after the meeting.

Ezzat has been at the helm of the group since May 2020 at the height of the pandemic, when the tech industry experienced a surge in demand from businesses looking to keep their operations running after lockdowns forced them to go remote.

Capgemini said its board of directors had unanimously agreed with the proposal to renew Ezzat's mandate, a vote of confidence in his strategy and push to invest in artificial intelligence. The group said last year that the technology would usher in a wave of new, specialized roles, such as generative AI architects and trainers, and is investing to train its workforce.

"Through our EUR2 billion investment plan announced last July, we continue to strengthen and upskill our teams, invest in solutions and leverage a broad ecosystem of technology partners including Microsoft, Google, AWS, Salesforce and Mistral AI," Ezzat said.

Capgemini posted revenue of EUR22.52 billion for the year, up 4.4% at constant currency, returning to a more modest growth rate after two particularly strong years. The company said that macroeconomic challenges and geopolitical tensions had led to a market slowdown in 2023. In the fourth quarter, the group recorded a 0.2% constant-currency contraction in sales to EUR5.62 billion.

Organic free cash flow--a closely watched metric by analysts and investors--climbed to EUR1.96 billion in 2023 from EUR1.85 billion.

The group had targeted annual constant-currency revenue growth of 4% to 7%, an operating margin between 13% and 13.2% and organic free cash flow of roughly EUR1.8 billion.

For 2024, Capgemini expects constant-currency revenue growth of up to 3%, an operating margin between 13.3% and 13.6% and organic free cash flow of about EUR1.9 billion.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

February 14, 2024 05:01 ET (10:01 GMT)

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