Capgemini SE

S&P Global Ratings' stable outlook reflects our view of Capgemini's solid balance sheet and liquidity, and our expectation of sustained revenue recovery (above 5%) after our estimate of a slight drop in 2020, due to the outbreak of COVID-19. We expect the group's adjusted EBITDA margin will remain at 13% or above, adjusted leverage will remain above 2.0x, and FFO to debt below 45%. We would consider lowering our rating if Capgemini's adjusted debt to EBITDA increases well above 3.0x for a prolonged period, with FFO to debt remaining at 20% or below. This could occur through unexpected deterioration in operating performance or lower synergies and higher required costs for Altran's integration than we currently anticipate. We could take a

...Capgemini is building comfortable rating headroom with strong third-quarter results. We anticipate Capgemini's revenue to increase by 14%-15% in 2021, following the full consolidation of Altran, and by 7%-8% per year on average (at constant currency), supporting annual improvement in its operating margin at above 12.7% in 2021 and above 13% by 2023. We expect other operating income and expenses, including restructuring and integration costs, will amount to about 500 million annually (partly noncash) on average. Although we expect the pandemic's negative macroeconomic effect to linger over 2022, we expect industry projections to persist, supporting our forecasted revenue growth. This is because digitization across marketing, sales, operations, engineering, manufacturing, supply-chain, and planning is at an unprecedented level and will remain a long-term trend. Competition and sustainability stakes are high, forcing companies to keep transforming, investing, and innovating to remain relevant,...

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