First quarter of 2020 – Atos

A resilient profile and a sturdy balance sheet to deal with an unparalleled condition Earnings

A resilient profile and a sturdy balance sheet to deal with an unparalleled condition

Earnings at € 2,834 million

-.eight% organic growth

Reserve to bill ratio at 103%

Renewals of important contracts in North America

Acceptable enterprise blend to assist customers in Covid-19 context

Essential value actions being executed to shield functioning margin

SPRING transformation method to an Business technique perfectly on keep track of

Update of 2020 objectives publish Covid-19

 

Paris, April 22, 2020,

Atos, a international chief in digital transformation, currently announces the revenue of its first quarter of 2020.

Elie Girard, CEO, claimed: “In this unparalleled natural environment exactly where uncertainty prevails, our first precedence has been to shield our staff while giving whole continuity of provider to our shoppers. The Group is solidly positioned to navigate effortlessly through the crisis many thanks to deep client associations across all industries, a resilient enterprise blend and a robust balance sheet that supplies a sturdy economical overall flexibility.

Our a hundred and ten,000 colleagues across the earth have provided an instant and fantastic reaction to customers’ worries and need to have for assist through our “Always Ready” method built already due to the fact the commencing of the calendar year. Now our minds and efforts are turning to the publish-Covid instances, actively preparing for the “new normal” which will see an acceleration in precise customers’ requirements, particularly knowledge platforms, cybersecurity, cloud migration, digital workplace and decarbonization.

We revise currently our objectives for 2020 demonstrating the resilience of the Group and the willingness to share any affect pretty across stakeholders. I am confident that Atos will emerge from this international crisis more robust than at any time and all set to move forward to the upcoming stage.”

Q1 2020 revenue was € 2,834 million, down -.eight% organically. In the context of Covid-19 crisis and restrictions and lockdowns in March in most of the countries exactly where the Group operates, revenue lessened only a bit many thanks to the resilient profile of its companies primarily based on multi-calendar year contracts blended with its solid enterprise in Major Information and Cybersecurity. Also, and in spite of the crisis, the Group accelerated its commercial dynamism with order entry at € 2,908 million primary to a e-book to bill ratio of 103%, considerably up in contrast to final calendar year at 86%.

Q1 2020 revenue functionality by Business

In € million Q1 2020 Q1 2019* Organic and natural
evolution
Production 539 555 -2.nine%
Fiscal Expert services & Insurance 527 542 -2.6%
Community Sector & Defense 584 566 +three.2%
Telecom, Media & Technologies 443 439 +.eight%
Methods & Expert services 418 416 +.four%
Health care & Daily life Sciences 323 340 -four.nine%
Overall Group 2,834 2,858 -.eight%
* At continuous scope and exchange fees

 

Production arrived at € 539 million of revenue, down -2.nine% at continuous scope and exchange fees. The Business benefitted from a excellent functionality in Automotive with the ramp-up of a German motor vehicle organization and Rheinmetall on knowledge administration contracts, compensating the affect in Daimler owing to Covid-19 and the ramp down of PSA. Conversely, Production was impacted by decreased volumes with Siemens, a slowdown in the Aerospace sector owing to Covid-19, and many shifts of machines sales toward the finish of the quarter.

Fiscal Expert services & Insurance revenue was € 527 million in the first quarter 2020, down by -2.6% organically. Northern Europe and Southern Europe benefited respectively from the ramp-up with Aegon in the United Kingdom, as perfectly as the improvement of activity with a payment organization in France which have a lot more than compensated for the reduction of volumes from banking institutions in Central Europe. Developing markets experienced from non-repeated sales executed final calendar year in APAC and Center East & Africa. In North America, undertaking primarily based functions reduce already noticed in past quarters was accelerated in March owing to conclusions from many Fiscal Expert services firms to postpone or lower discretionary expenses in the context of Covid-19.

Community Sector & Defense revenue was € 584 million, up +three.2% at continuous scope and exchange fees. The growth was pushed by the sturdy functionality recorded in Northern Europe, many thanks to the continuation of the agreement with European Centre for Medium range Temperature forecast as perfectly as with EU Lisa and clever knowledge system in Benelux. North America attained balance in spite of decreased volumes, many thanks to extra sales on current contracts. The condition was a lot more challenging in Southern Europe, impacted by the ramp-down of Superior Functionality Computing activity as perfectly as non-repeated sales executed final calendar year. Central Europe was negatively impacted by decreased volumes, and last but not least Developing Markets was impacted by revenue recorded final calendar year for the Tokyo Olympic Online games planning and not repeated this calendar year.

Telecom, Media & Technologies arrived at € 443 million, up +.eight% organically, with a contrasted functionality by geography and by activity. Superior Tech & Technologies posted a sturdy growth, pushed by Unified Communication & Collaboration choices in Central Europe, sustained by organic growth of newly obtained organization Maven Wave in North America and agreement ramp-up with a huge husband or wife, as perfectly as extra sales in Southern Europe. Media improved as perfectly, benefitting from new enterprise improvement, coupled with better volumes with current customers in North America. Telecom activity was mainly impacted by some ramp-downs in Southern Europe.

Earnings in Methods & Expert services arrived at € 418 million and improved by +.four% organically. Company in Power & Utilities sector fueled the growth. In individual, the Business shipped a Superior Functionality Personal computer in South America. Electronic workplace providers ramped-up with a important Power company in North America and with Nationwide Grid in Northern Europe. The condition in Retail, Transportation & Hospitality sectors was a lot more challenging in the context of Covid-19. Certainly, while the ramp-up of a new IoT agreement signed in the place of predictive servicing benefitted to North America, the Business confronted volume reductions in Europe.

Health care & Daily life Sciences revenue was € 323 million, down by -four.nine% in contrast to Q1 2019, impacted by volume reductions on incredibly precise contracts in equally North America and Northern Europe, while the marketplace benefitted from the ramp-up of a international agreement with Bayer and a digital workplace agreement signed final calendar year in Central Europe, and the ramp-up of an Australian Community Agency agreement in Developing Markets. Southern Europe benefitted from a sturdy activity in digital jobs and Superior Functionality Computing.

 

Q1 2020 revenue functionality by Regional Company Unit

 

In € million Q1 2020 Q1 2019* Organic and natural
evolution
North America 681 699 -2.6%
Northern Europe 698 696 +.three%
Southern Europe 594 609 -2.6%
Central Europe 667 660 +one.%
Developing Markets 194 192 +one.%
Overall Group 2,834 2,858 -.eight%
* At continuous scope and exchange fees

The first quarter of 2020 showed diverse revenue evolution by Regional Company Models which can be summarized as follows:

  • In North America, revenue arrived at € 681 million, lowering by -2.6% organically mainly coming from Covid-19 brought on undertaking stops and volume reductions in many Industries. The Company Unit attained growth in Telecom, Media & Technologies and Methods & Expert services many thanks to new emblem, better volumes and ramp up of current contracts
  • In Northern Europe, revenue was approximately stable at € 698 million. Solid enterprise was recorded in Community Sector & Defense mainly led by the continuation of the HPC agreement with European Centre for Medium Selection Temperature Forecast, as perfectly as by deliveries to European Union Establishments. Telecom, Media & Technologies and Manufacturing confronted some contracts ending and Health care & Daily life Sciences a reduction on Company Method Outsourcing contracts
  • In Southern Europe, revenue arrived at € 594 million, lowering by -2.6% Health care & Daily life Sciences posted a double-digit growth many thanks to digital jobs shipped and Superior Functionality Computing functions. The geography was impacted by non-repeated sales also on Superior Functionality Computing functions executed final calendar year in many Industries
  • In Central Europe, the geography improved organically by +one.% primary to a € 667 million Production benefitted from many ramp-up of infrastructure contracts and extra jobs. Earnings in Telecom, Media & Technologies also improved, pushed by Unified Communication & Collaboration enterprise. Health care & Daily life Sciences posted a double-digit growth mainly fueled by new contracts. Community Sector & Defense was impacted by non-repeated sales and jobs attained final calendar year while new jobs in SAP HANA and in Electronic were being executed in Germany and in Austria. At last, Methods & Expert services was impacted by a decreased demand in Unify Communication channels
  • Developing Markets arrived at € 194 million revenue, +one.% Production posted a solid growth, pushed by a better stage of sales as perfectly as more robust demand in digital jobs mainly in Asia-Pacific and South America. Earnings in Resource & Expert services strongly improved fueled by Superior Functionality Computing activity in South America while the condition was a lot more challenging in Fiscal Expert services mainly in Asia Pacific.

Q1 2020 revenue functionality by Division

 

In € million Q1 2020 Q1 2019* Organic and natural
evolution
Infrastructure & Information Management one,558 one,566 -.5%
Company & System Methods one,016 one,069 -four.nine%
Major Information & Cybersecurity 259 223 +16.three%
Overall Group 2,834 2,858 -.eight%
* At continuous scope and exchange fees

In Infrastructure & Information Management (IDM), revenue was € 1,558 million, -.5% organically. The Division ongoing to roll-out its transformation product by extending Hybrid Cloud Orchestration as perfectly as increasing Electronic Office implementation.

The precise condition owing to Covid-19 pandemic needed a solid enterprise continuity for crucial infrastructures for its customers. Certainly, the Division recorded a sturdy demand on Electronic Office solutions (accessing purposes from any place), company interaction choices with Unified Collaboration & Communication, community connections, and many others. These functions are linked to the distant working that has been put in location by a whole lot of firms to deal with the lockdown and retain their activity.

At last, in the recent context, the Division recorded less revenue created by machines sales and fertilization in current contracts in March.

In Company & System Methods (B&PS) revenue was € 1,016 million, -four.nine% organically. As a reminder, the Division was down -one.2% in Q4 2019 owing to the headwinds in Fiscal Expert services in North America as perfectly as in Automotive marketplace in Germany, and for that reason did not count on any improvement in the commencing of 2020 even right before Covid-19.

In the new context of Covid-19, the Division had to deal with a slowdown in most of the Industries. Certainly, this enterprise section is considerably a lot more dependent from the cycle and customers begun in March to postpone discretionary jobs. The Group considers that the most impacted functions will be Technologies Experienced Expert services necessitating engineers working on buyer sites, that are not able to be executed on a distant mode (circa 30% of Company & System Methods revenue). On the opposite, Software Growth and Servicing, primarily based on prolonged term contracts should really be resilient (circa forty% of Company & System Methods revenue). In between, a huge part of crucial Electronic Assignments (circa 30% of Company & System Methods revenue) can be executed on a distant mode, but the volume of the enterprise will rely in the upcoming months from the buyer needs on new jobs.

The enterprise in Major Information & Cybersecurity (BDS) remained sturdy with revenue up +16.three% organically at € 259 million in the first quarter of 2020. In the recent context, the distant working as perfectly as the improve of cyberattacks led firms to fortify the protection of their infrastructure and knowledge. As illustrations, customers requested for a lot more solutions of identification in fast mode, and consulting on the solidity of their protection infrastructure.

In Major Information, there was no discontinuity in the supply chain many thanks to pro-active inventory administration. The demand stays sturdy in Superior Functionality Computing. As an example, distant obtain to SAP HANA calls for extra processing electric power and for that reason much larger requirements of Sequana S in-memory servers. At last, Mission Essential Process enterprise also recorded a high revenue growth.

Industrial activity

For the duration of the first quarter of 2020, the Group order entry arrived at € 2,908 million symbolizing a Reserve to Bill ratio of 103%, in contrast to 86% attained around the very same period final calendar year.

The most important new contracts signed around the period were being notably in North America with a huge American organization in Defense Sector (Telecom, Media & Technologies), in Central Europe with Norddeutsche Landesbank (Fiscal Expert services & Insurance) and a international european pharmaceutical organization (Wellness & Daily life Sciences) and in Southern Europe with a important utility in France and with Ile-de-France Mobilités (Methods & Expert services), as perfectly as with a French banking institution (Fiscal Expert services & Insurance).

Deal renewals of the quarter bundled huge signatures with notably the first part of the renewal of Texas Division of Information and facts Methods agreement (Community Sector & Defense), the renewal of Conduent agreement (Telecom, Media & Technologies) in North America, a agreement with a Worldwide European firm in cash products for SAP HANA (Production) in Central Europe, as perfectly as with the French UGAP (Community Sector & Defense) in Southern Europe.

In line with this dynamic commercial activity, the whole backlog amounted to € 22.one billion at the finish of March 2020, symbolizing one.nine calendar year of revenue. The whole certified pipeline arrived at € seven.6 billion, symbolizing seven.eight months of revenue.

Human sources

The overall headcount was 108,602 at the finish of March 2020, broadly stable in contrast to 108,317 at the finish of December 2019.

In the first quarter of 2020, the Group hired 5,043 staff members, mainly in offshore countries.

How Atos handles Covid-19 affect

Since finish of January, the Group administration, supported by Group Human Methods, has been concentrating on the health and fitness and protection of staff while making certain a proper implementation of pre-defined enterprise continuity plans in each and every Division.

The Group also activated the “Always Ready” method, pulling alongside one another all Group solutions especially adapted to this distressed condition and being proactively available to customers to enable them go through the crisis: assist to generalized homeworking which include collaboration options, precise assist to public & health and fitness institutions, reinforcement of cybersecurity protections, and many others. Customers’ feed-back and satisfaction with regards to Atos teams reactivity has been overwhelmingly optimistic. Atos is also associated into quite a few governmental jobs across the earth to combat versus the virus, and prepare the progressive aid of restrictions and lockdowns.

To shield its functioning margin, the Group has taken sturdy actions on its value foundation in the pursuing locations:

  • Solid centralized monitoring of personnel prices (using the services of freeze, cancellation of wage boosts, affect on variable compensation, holidays, and many others.)
  • Substitution of subcontractors by individual freed up staff members
  • Cancellation of non buyer related discretionary expenses
  • Solid saving method on non personnel prices.

In overall, the Group launched a method symbolizing a overall amount of c. four hundred million euros of personal savings in 2020.

Up-to-date 2020 objectives publish Covid-19

As the 2020 objectives disclosed on February 19, 2020 were being pre Covid-19 impact, the Group updates currently its a few objectives for the whole calendar year 2020, primarily based on the recent macroeconomic state of affairs of a progressive recovery around H2 2020 and 2021, as perfectly as the management’s daily discussions with Group customers:

  • Earnings organic evolution: between -2% and -four% (vs . c. +2% pre Covid-19)
  • Operating margin fee: nine% to nine.5% of revenue (vs . +twenty bps to + forty bps previously mentioned 2019 (ten.three% reported) pre Covid-19)
  • Free of charge cash circulation: € .5 billion to € .6 billion (vs . c. € .seven billion pre Covid-19)[*].

The Group suspends its targets for 2021, the final calendar year of the a few-calendar year system introduced at the Trader Day held on January 30, 2019. The Group will present its vision as perfectly as its mid-term targets at the 2020 Analyst Day (date to be rescheduled).

Postponement of Yearly Normal Meeting and remarkable cancellation of dividend payment in 2020

Due to the remarkable conditions linked to the Covid-19, the Board of Administrators, which achieved on March 31, 2020, has made the decision to postpone the Yearly Normal Meeting initially scheduled on May fourteen, 2020 to June 26, 2020.

In these unparalleled conditions, for the duration of its session on April 21, 2020, the Board of Administrators took the remarkable decision not to suggest the one.forty euro for each share dividend which was initially viewed as to be submitted to the Yearly Normal Meeting. In addition, the Chief Executive Officer as perfectly as other members of the Normal Management Committee have made the decision to lower by 30% their compensation for the duration of the recent a few-thirty day period period from March to May 2020. The Chairman of Atos’ Board of Administrators has built the very same decision.

The Group confirms that the cancellation of the dividend this calendar year is an exception to its dividend plan with a pay out-out ratio between twenty five% and 30% of Net money Group share.

 

Appendix

Earnings at continuous scope and exchange fees reconciliation

In € million Q1 2020 Q1 2019 % alter
Statutory revenue 2,834 2,818 +.6%
Exchange fees impact 26  
 
Earnings at continuous exchange fees 2,834 2,843 -.three%
   
Scope impact fourteen  
Exchange fees impact on obtained/disposed perimeters one  
Earnings at continuous scope and exchange fees 2,834 2,858 -.eight%
       

Scope results amounted to €+fourteen million for revenue and are mainly related to the acquisition of Maven Wave, consolidated as of February one, 2020 (2 months for €+eighteen million), the acquisition of IDnomic, consolidated as of October one, 2019 (three months for €+four million), the acquisition of X-PERION, consolidated as of December one, 2019 (three months for €+2 million), the disposal of some precise Unified Communication & Collaboration functions typically in Q1 2020 (overall restatement of €-four million) as perfectly as previous ITO functions in the United kingdom commencing of H2 2019 (three months for €-four million), and last but not least the disposal and decommissioning of non-strategic functions inside CVC.

Forex exchange fees results typically came from the American dollar as perfectly as the British pound and positively contributed to revenue for €+26 million.

 

Convention contact

Now, Wednesday, April 22, 2020, the Group will keep a convention contact in English at 08:00 am (CET – Paris), chaired by Elie Girard, CEO, in order to remark on Atos’ Q1 2020 revenue and answer queries from the economical local community.

You can join the webcast of the convention:

  • on internet, in the Investors segment
  • by smartphones or tablets through the scan of:
  • by telephone with the dial-in, 5-ten minutes prior the starting off time:
    • France             +33 one 70 70 07 81       code 12652364
    • Germany             +forty nine sixty nine 2222 2625       code 12652364
    • United kingdom             +forty four 844 481 9752       code 12652364
    • US             +one 646 741 3167         code 12652364
    • Other countries +forty four 2071 928338        code 12652364

Soon after the convention, a replay of the webcast will be available on atos.internet, in the Investors segment.

 

Forthcoming functions

June 26, 2020              Yearly Normal Meeting

July 27, 2020               1st fifty percent 2020 success

October 22, 2020         Third quarter 2020 revenue

To be scheduled            2020 Analyst Day