Atos issues second profit warning in 7 months • The Register


Atos issued a profit warning following a “major” contract review with a UK financial services client, as well as slippages on larger projects and lower resale revenues.

The French company told investors this morning that the business forecast for the 2021 calendar, outlined in July, was unlikely to be met. The turnover of 5% turned into a decrease of 2.4% to 10.8 billion euros; the operating margin would be closer to 4% of turnover than 6%, and free cash flow would have evolved to -420 million euros.

The latest set of figures is not yet finalized or audited, and comes just days after Rodolphe Belmer took over as CEO of Atos last week when financial data was “collected and consolidated”, as the executive was quick to point it out.

“The current state of financial knowledge leads us to the obligation to issue an income warning today due to the large variance in financial KPIs. However, most of the elements underlying this serious discrepancy are non-recurring. In particular, the large variance in Free Cash Flow is primarily from working capital, ”Belmer said.

Atos, he said, has “the necessary assets and all the talents to make a rapid turnaround”. The intention is for the new CEO to present a “new organization” to the current board at the end of February, when the 2021 results are expected.

What caused the investor warning? The company said the sales decline was due in part to Big Data, HPC and Unified Comms & Collaboration projects pushed into 2022 “due to supply chain challenges” as well as “customer deferrals in the industry. public and defense in the Netherlands and UK. “Other factors include a delay in compensation by clients for overtime work in 2021 and a large contract facing problems.

This is the ‘unexpected reassessment of the cost of continuing the transformation, replatforming and operations of a financial services BPO contract, signed in 2018 for 15 years with a large UK financial institution, resulting in a major rate revision completion of the project at the end of December 2021, and therefore resulting in a negative impact in 2021, ”said Atos.

The BPO contract also weighed on the operating margin, as did well-documented supply chain issues and customers delaying work until 2022. Cash flow was also affected by the above issues. , the company said.

This is the second profit warning in seven months for Atos, the pandemic being questioned.

James Preece, senior analyst at Megabuyte, said today’s updates “crown what has been a rather miserable 2021 for Atos”.

Preece added, “Starting with its questionable and ultimately unsuccessful attempt to acquire DXC Technology, an equally disputed and indebted US counterpart in January 2021, the group battled declining organic growth, a massive restructuring of operations in Germany. , a North American accounting scandal and, not surprisingly. , a CEO departure in October. “

The main drivers of a turnaround at Atos should be “technology and decarbonization consulting,” added Preece. ®


Comments are closed.