In Q3 21, revenue on constant currency was stable and slightly below the consensus. Strong growth (including acquisition) in digital, cloud, security and decarbonization services was offset by the decrease in the classic infrastructure. Organic revenue decreased (-2.3%) taking into account a negative effect (c.75bp) of the shortage of some components in High Performance Computing. The group transformation is progressing. Finally, the CEO Elie Girard resigned. The new CEO Rodolphe Belmer will tak
Companies: Atos (ATO:EPA)Atos SE (ATO:PAR)
Atos gave a profit warning for its H1 21 figures and downgraded the 2021 guidance on 12 July 2021. The final H1 21 figures confirmed the pre-announced numbers. For 2021, guidance includes stable revenue at constant currency and including acquisitions, an operating margin of c.6% of revenue and positive free cash flow.
Atos is looking for partners in datacentre hosting, Unified communications & collaboration in the US and sub-critical activities which represent a total of 20% of revenue.
Atos made a profit warning on its H1 21 figures and downgraded its 2021 guidance. The decrease in the legacy infrastructure activity accelerated in H1 21 and was not offset by the strong demand of migration into the cloud. The negative effect is significant on the operating margin due to the low flexibility of staff costs in legacy IT. Atos implemented also restructurings in the loss-making infrastructure activity in Germany. Atos seems to be having to undergo changes more than it expected.
Revenue was below expectations in Q1 21. Revenue decreased by 1.9% at constant currency (-3.9% organically). Revenue was impacted by a decrease in North America (-9.4%) and Central Europe (-8.5%), not offset by an increase in the other geographic areas. Atos announced a strategic review of its activities in order to sell non-core assets. 2021 guidance is maintained. Finally, Atos confirmed no material mis-statements for the 2020 financial statements at this stage. Atos implemented a remediation
The announcement of a qualified opinion on two US legal entities of Atos by the statutory auditors were a cold shower. The share price dropped sharply. It could take long while for Atos to restore investors’ confidence.
In Q4 20, the decrease in organic revenue slowed sequentially. The commercial activity was very strong with a book-to-bill ratio of 130%. In 2020, the decrease in organic revenue (-3%) was in the middle of guidance, while the operating margin (9% of revenue) was in the low range of guidance. Atos is anticipating organic revenue growth as from Q2 21 and an operating margin at 2019’s level in 2022, which was not appreciated by the stock market.
Companies: Atos SE
Although initially disappointing, Atos’ proposal to acquire DXC Technology could be a good operation. The negative is the size of the operation which would deprive Atos from actively developing its security activities through M&A. It is not certain that the integration of DXC Technology (51% of revenue in Global Infrastructure Services) will help to accelerate organic growth. Conversely, it would bring big accounts, large economies of scale and there should be potential for efficiency at DXC Tec
Although initially disappointing, Atos’ proposal to acquire DXC Technology could be a good operation. The negative is the size of the operation which would deprive Atos from actively developing its security activities through M&A. Furthermore, it is not certain that the integration of DXC Technology (51% of revenue in Global Infrastructure Services) will help to accelerate organic growth. Conversely, it would bring big accounts, large economies of scale and there should be higher potential for e
Atos launches Atos OneCloud and will invest €2.0bn over five years. Atos OneCloud is a set of ten offerings which combine all the expertise of the group in the cloud, cybersecurity and decarbonisation services. It is unique in the market according to Atos. It should enable it to achieve the medium-term target which includes revenue growth of +5-7%, of which 2% in acquisitions and an operating margin of 11-12% of revenue.
The decrease in organic revenue (-3.5%) was as expected in Q3 20. The Big Data & Cybersecurity division continued to benefit from high double-digit organic growth. The trend was much better upstream with new orders up 20% (excluding the €3.0bn contract signed with Siemens). This good achievement enables us to expect a positive turnaround in organic revenue next year (Q2 21). Atos reassured by confirming the targeted cost savings and catch-up of cash in H2 20.
In Q2 20, the drop in organic revenue was limited in a tough context (-4.8%) and the order intake was strong. In H1 20, the decrease in operating margin (-1.1pt to 8% of revenue) was attenuated by cost savings (43% of the €400m targeted achieved). The deterioration in FCF was significant (€-172m) due to lower sales of receivables, an unfavourable timing of third-party payments and HPC projects in progress. A catch-up is anticipated in H2 20.
In Q1 20, organic revenue decreased by 0.8% due essentially to Business & Platform Solutions (-4.9%). As expected the Infrastructure & Data Management was resilient (-0.5%), while Big Data & Cybersecurity was strong (+16.3%). Atos implemented a cost savings programme representing €400m in 2020. Finally, the group provided guidance for 2020 (organic revenue down -2%/-4%, operating margin 9.0-9.5% of revenue) which highlight such times and cancelled the payment of a dividend with respect to FY2019
Organic revenue growth accelerated in Q4 19 as expected (+2.2% vs +1.8% in Q3 19) thanks to BDS (+28% vs +18% in Q3 19) and the confirmation of a positive trend in IDM (+0.3% vs +0.8% in Q3 19). In 2019, the operating margin improved to 10.3% of revenue (+0.5pt organically) thanks to an increase in IDM. Conversely, B&PS was disappointing as the cost synergies related to Syntel were offset by various negative items. No surprise on 2020 guidance.
Organic revenue growth accelerated in Q3 19 (+1.8% vs +1.1% in Q2 19, +0.4% in Q1 19) as expected. Infrastructure & Data Management turned slightly positive (+0.8%) thanks to a positive turnaround in North America and Big Data & Cybersecurity had impressive growth (+17.6%). 2019 guidance is confirmed. The integration of Syntel is progressing even if it is not really visible in the figures but it should be during 2020. Big Data & Cybersecurity has great growth and valuation potential.
In Q2 19, organic revenue growth accelerated (+1.1% vs +0.4%) in line with expectations. The improvement in the operating margin was better than expected (+0.2pt to 9.2% of revenue). Nevertheless, the half year again brought some disappointments in organic revenue growth at B&PS and free cash flow. H2 19 is expected to be better with IDM back to organic revenue growth, a strong operating margin improvement at IDM and the catch-up in free cash flow.
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Enlarged RCF. Reassuring news.
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Today's news & views, plus announcements from BHP, MGGT, RIO, BWY, MONY, BGO, YOU, AVAP, PCA & SOLG.
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