Cap Gemini losses top £300m

Link: E&Y partners out of pocket

The loss for 2002 compares with a net income of ? ¬152m in 2001, with revenue down 16% to ? ¬7.05bn (£4.82bn).

The company admitted 2002 did not see the recovery in demand hoped for at the beginning of the year.

But analysts said that the company’s net cash of ? ¬465m (£318m), substantially higher than expectations, had succeeded in easing concerns about the rest of the balance sheet.

A breakdown on the results showed positive signs for the company’s outsourcing business with revenues increasing from 21% to 27%. The top vertical sector was health and public service-related business, which grew from 16% to 26%.

The company also said that a three-year restructuring plan, announced last June, was beginning to produce results.

They include a reorganisation around the group’s four disciplines, the simplifying and streamlining of operating structures, and the launch of new sales channels and initiatives.

In a statement CGE&Y said it was prepared for a slight revenues decrease in the first half of 2003 but ‘maintains the ambition’ to bring operating margins back to 5%.

Anthony Miller, principal analyst at Ovum Holway said the poor results reflected a flawed strategy last year, and the company was now in catch up mode.

‘CGE&Y got caught because they backed the wrong horses [bespoke project services and telecoms] while taking their eye off the outsourcing and BPO balls.

‘But with still three-quarters of their business coming from project services, 2003 will again be a very tough year, particularly in the UK, where they have been slipping down the outsourcing rankings.”‘