French IT consulting firm Capgemini has revised its 2024 revenue outlook downward for the second time this year, citing ongoing challenges in several markets, particularly in manufacturing, which adversely affected third-quarter sales.
The company, which provides a range of services including cloud computing, artificial intelligence, and enterprise management across various sectors, had previously anticipated a decline in annual revenue in July due to downturns in the automotive and aerospace industries.
The Paris-based organization now projects a revenue decrease of between 2% and 2.4% on a constant currency basis, a revision from its earlier estimate of a decline between 0.5% and 1.5%.
As a result, its shares dropped by 6.6% by 0902 GMT, making it one of the poorest performers on Europe's STOXX 600 index.
"The group is experiencing a lack of momentum in 2024 and possibly into 2025," noted Sarah Thirion, an analyst at Midcap Partners, highlighting the discretionary nature of spending and Capgemini's vulnerability to the automotive sector and sluggish European markets.
Nevertheless, she remarked that "the potential for gradual improvement in profitability remains viable beyond 2025."
Capgemini's revenue for the third quarter decreased by 1.6% at constant exchange rates, totaling 5.38 billion euros ($5.82 billion).
"In a generally soft market, we anticipate similar growth in Q4," stated CEO Aiman Ezzat in the announcement, while also mentioning that the company expects challenges in the technology and telecommunications sectors to gradually diminish.
"Client demand continues to focus on operational efficiencies and cost reduction, and we are capitalizing on their increasing interest in AI and Gen AI services," Ezzat added.