Retailers boost Capgemini in the UK

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Capgemini, Europe’s largest IT services company, reported a 9.2 per cent increase in revenues for the first three months of the year after strong growth in the US and a surprise recovery in the UK.

Paul Hermelin, chief executive, said UK retailers looking to move their businesses online had helped lift sales in the region 3.9 per cent, which is higher than the growth rate over the previous four quarters.

The company ran a successful pilot programme for Burberry two years ago, which helped the luxury goods brand expand its internet sales and target social networking promotions better.

“What we have done for Burberry we are taking to many other companies,” Mr Hermelin said.

The France-based IT services company had previously had little growth in the UK because of the weak economy and public sector spending cuts. The UK expansion was in contrast to recent economic figures indicating that the country was back in recession.

“The UK was a surprise, frankly. The US was strong but we expected that. It has been a very nice quarter for us,” Mr Hermelin said.

“The market looks surprisingly healthy. If that would continue we could lift guidance for the full year. However, it is still too early and we are remaining vigilant,” he added. Capgemini expects limited organic growth for 2012, but an increase in operating margin, which stood at 7.4 per cent last year.

The only poorly performing unit was the Netherlands, where revenues fell 7.8 per cent as public spending cuts and the economic problems of banks such as ABN Amro continued to depress the market.

Mr Hermelin said Capgemini was likely to cut jobs in the region to bring down costs. Details of a restructuring plan will be announced in the summer.

In the US, meanwhile, sales grew 13 per cent to €505m. Once one of the company’s weakest regions, the US is the strongest area of growth for Capgemini.

Mr Hermelin said he was still looking for an acquisition that would help to increase Capgemini’s business in the US, but prices were proving too high on most deals. The company is now considering a series of smaller acquisitions in the region.

Shares in Capgemini, which have lost 30 per cent of their value over the past year amid fears of an economic slowdown, were flat on Thursday at €29.

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