PHOENIX, Feb 24 – Capgemini’s 2004 revenues rose 9% in €uros (up 15% in U.S. dollars) to €6.3 billion ($8.3 billion), but big write-offs resulting from continued restructuring dropped €359 million ($474 million) of red ink to the bottom line.  Operating profit, fell to €58 million from €155 million in 2003.

The stock market evidently liked what it saw.  Undaunted by the company’s continuing losses, the Paris Bourse lifted the Capgemini shares by almost 8% to €28.30 following the release of its latest results (see the chart).  That’s because the operating income fell less than analysts had feared, and revenues and new contract sales were higher than expected.

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Strong European, SMB Results

Meanwhile, Capgemini’s European operations seem to be going great guns again.  Their operating income rose from €12 million in the first half of the year, to €110 million in the second half, and “is starting 2005 with renewed operational confidence,” the company said. 

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Outsourcing Growth Adds to Profit Woes, For Now…

Outsourcing is also gaining share of Capgemini’s business.  It now accounts for one-third of the total (up 21% over 2003 as reported in euros, and up 26% in U.S. dollars).  

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Outlook

The company is hoping that as outsourcing matures, and the big deals’ upfront costs begin to wane, they will correspondingly drop larger amounts to the bottom line.  The rapid growth in its SMB business will also have a beneficial profit effect.