First quarter of 2020 – Atos

Elvera Bartels

A resilient profile and a powerful harmony sheet to deal with an unparalleled predicament

Profits at € 2,834 million

-.eight% natural and organic progress

Book to monthly bill ratio at 103%

Renewals of significant contracts in North America

Acceptable small business mix to guidance clients in Covid-19 context

Important expense steps getting applied to safeguard running margin

SPRING transformation plan to an Market approach effectively on track

Update of 2020 aims post Covid-19

 

Paris, April 22, 2020,

Atos, a world wide chief in electronic transformation, now announces the profits of its first quarter of 2020.

Elie Girard, CEO, explained: “In this unparalleled atmosphere exactly where uncertainty prevails, our first priority has been to safeguard our staff while featuring full continuity of service to our customers. The Team is solidly positioned to navigate efficiently by the crisis many thanks to deep consumer interactions across all industries, a resilient small business mix and a robust harmony sheet that provides a powerful monetary flexibility.

Our a hundred and ten,000 colleagues across the world have presented an immediate and remarkable reaction to customers’ worries and want for guidance by our “Always Ready” plan built presently considering that the starting of the year. Now our minds and endeavours are turning to the post-Covid instances, actively preparing for the “new normal” which will see an acceleration in particular customers’ demands, specifically information platforms, cybersecurity, cloud migration, electronic office and decarbonization.

We revise now our aims for 2020 demonstrating the resilience of the Team and the willingness to share any influence relatively across stakeholders. I am convinced that Atos will arise from this world wide crisis much better than at any time and prepared to move forward to the up coming stage.”

Q1 2020 revenue was € 2,834 million, down -.eight% organically. In the context of Covid-19 crisis and constraints and lockdowns in March in most of the countries exactly where the Team operates, profits decreased only a bit many thanks to the resilient profile of its businesses centered on multi-year contracts merged with its solid small business in Large Details and Cybersecurity. Additionally, and in spite of the crisis, the Team accelerated its industrial dynamism with order entry at € 2,908 million primary to a book to monthly bill ratio of 103%, considerably up compared to final year at 86%.

Q1 2020 profits overall performance by Market

In € million Q1 2020 Q1 2019* Organic
evolution
Manufacturing 539 555 -2.nine%
Economical Products and services & Insurance policy 527 542 -2.six%
Community Sector & Defense 584 566 +three.2%
Telecom, Media & Know-how 443 439 +.eight%
Assets & Products and services 418 416 +.4%
Healthcare & Daily life Sciences 323 340 -4.nine%
Complete Team 2,834 2,858 -.eight%
* At continuous scope and trade prices

 

Manufacturing reached € 539 million of profits, down -2.nine% at continuous scope and trade prices. The Market benefitted from a excellent overall performance in Automotive with the ramp-up of a German automobile company and Rheinmetall on information management contracts, compensating the influence in Daimler thanks to Covid-19 and the ramp down of PSA. Conversely, Manufacturing was impacted by lessen volumes with Siemens, a slowdown in the Aerospace sector thanks to Covid-19, and several shifts of devices sales in the direction of the end of the quarter.

Economical Products and services & Insurance policy profits was € 527 million in the first quarter 2020, down by -2.six% organically. Northern Europe and Southern Europe benefited respectively from the ramp-up with Aegon in the United Kingdom, as effectively as the development of activity with a payment company in France which have additional than compensated for the reduction of volumes from banking establishments in Central Europe. Escalating markets suffered from non-recurring sales performed final year in APAC and Middle East & Africa. In North America, job centered things to do minimize presently noticed in past quarters was accelerated in March thanks to choices from several Economical Products and services companies to postpone or decrease discretionary fees in the context of Covid-19.

Community Sector & Defense profits was € 584 million, up +three.2% at continuous scope and trade prices. The progress was driven by the powerful overall performance recorded in Northern Europe, many thanks to the continuation of the deal with European Middle for Medium variety Weather forecast as effectively as with EU Lisa and smart information system in Benelux. North America achieved steadiness inspite of lessen volumes, many thanks to added sales on existing contracts. The predicament was additional demanding in Southern Europe, impacted by the ramp-down of Substantial General performance Computing activity as effectively as non-recurring sales performed final year. Central Europe was negatively impacted by lessen volumes, and ultimately Escalating Marketplaces was impacted by profits recorded final year for the Tokyo Olympic Video games planning and not recurring this year.

Telecom, Media & Know-how reached € 443 million, up +.eight% organically, with a contrasted overall performance by geography and by activity. Substantial Tech & Know-how posted a powerful progress, driven by Unified Communication & Collaboration offerings in Central Europe, sustained by natural and organic progress of newly acquired company Maven Wave in North America and deal ramp-up with a large associate, as effectively as added sales in Southern Europe. Media greater as effectively, benefitting from new small business development, coupled with increased volumes with existing clients in North America. Telecom activity was generally impacted by some ramp-downs in Southern Europe.

Profits in Assets & Products and services reached € 418 million and greater by +.4% organically. Enterprise in Electricity & Utilities sector fueled the progress. In particular, the Market sent a Substantial General performance Laptop in South America. Digital office expert services ramped-up with a significant Electricity provider in North America and with National Grid in Northern Europe. The predicament in Retail, Transportation & Hospitality sectors was additional demanding in the context of Covid-19. In fact, while the ramp-up of a new IoT deal signed in the area of predictive upkeep benefitted to North America, the Market confronted quantity reductions in Europe.

Healthcare & Daily life Sciences profits was € 323 million, down by -4.nine% compared to Q1 2019, impacted by quantity reductions on very particular contracts in both equally North America and Northern Europe, while the field benefitted from the ramp-up of a world wide deal with Bayer and a electronic office deal signed final year in Central Europe, and the ramp-up of an Australian Community Agency deal in Escalating Marketplaces. Southern Europe benefitted from a powerful activity in electronic jobs and Substantial General performance Computing.

 

Q1 2020 profits overall performance by Regional Enterprise Unit

 

In € million Q1 2020 Q1 2019* Organic
evolution
North America 681 699 -2.six%
Northern Europe 698 696 +.three%
Southern Europe 594 609 -2.six%
Central Europe 667 660 +1.%
Escalating Marketplaces 194 192 +1.%
Complete Team 2,834 2,858 -.eight%
* At continuous scope and trade prices

The first quarter of 2020 showed diverse profits evolution by Regional Enterprise Units which can be summarized as follows:

  • In North America, profits reached € 681 million, lowering by -2.six% organically generally coming from Covid-19 brought on job stops and quantity reductions in several Industries. The Enterprise Unit achieved progress in Telecom, Media & Know-how and Assets & Products and services many thanks to new emblem, increased volumes and ramp up of existing contracts
  • In Northern Europe, profits was about secure at € 698 million. Robust small business was recorded in Community Sector & Defense generally led by the continuation of the HPC deal with European Centre for Medium Vary Weather Forecast, as effectively as by deliveries to European Union Institutions. Telecom, Media & Know-how and Manufacturing confronted some contracts ending and Healthcare & Daily life Sciences a reduction on Enterprise Course of action Outsourcing contracts
  • In Southern Europe, profits reached € 594 million, lowering by -2.six% Healthcare & Daily life Sciences posted a double-digit progress many thanks to electronic jobs sent and Substantial General performance Computing things to do. The geography was impacted by non-recurring sales also on Substantial General performance Computing things to do performed final year in several Industries
  • In Central Europe, the geography greater organically by +1.% primary to a € 667 million Manufacturing benefitted from several ramp-up of infrastructure contracts and added jobs. Profits in Telecom, Media & Know-how also greater, driven by Unified Communication & Collaboration small business. Healthcare & Daily life Sciences posted a double-digit progress generally fueled by new contracts. Community Sector & Defense was impacted by non-recurring sales and jobs achieved final year while new jobs in SAP HANA and in Digital were being performed in Germany and in Austria. At last, Assets & Products and services was impacted by a lessen desire in Unify Communication channels
  • Escalating Marketplaces reached € 194 million profits, +1.% Manufacturing posted a solid progress, pushed by a increased amount of sales as effectively as much better desire in electronic jobs generally in Asia-Pacific and South America. Profits in Resource & Products and services strongly greater fueled by Substantial General performance Computing activity in South America while the predicament was additional demanding in Economical Products and services generally in Asia Pacific.

Q1 2020 profits overall performance by Division

 

In € million Q1 2020 Q1 2019* Organic
evolution
Infrastructure & Details Management 1,558 1,566 -.five%
Enterprise & System Answers 1,016 1,069 -4.nine%
Large Details & Cybersecurity 259 223 +sixteen.three%
Complete Team 2,834 2,858 -.eight%
* At continuous scope and trade prices

In Infrastructure & Details Management (IDM), profits was € 1,558 million, -.five% organically. The Division ongoing to roll-out its transformation design by extending Hybrid Cloud Orchestration as effectively as rising Digital Office implementation.

The particular predicament thanks to Covid-19 pandemic necessary a solid small business continuity for critical infrastructures for its clients. In fact, the Division recorded a powerful desire on Digital Office answers (accessing apps from wherever), organization communication offerings with Unified Collaboration & Communication, network connections, etc. These things to do are connected to the distant operating that has been place in location by a lot of corporations to deal with the lockdown and sustain their activity.

At last, in the existing context, the Division recorded less profits created by devices sales and fertilization in existing contracts in March.

In Enterprise & System Answers (B&PS) profits was € 1,016 million, -4.nine% organically. As a reminder, the Division was down -1.2% in This fall 2019 thanks to the headwinds in Economical Products and services in North America as effectively as in Automotive field in Germany, and as a result did not count on any improvement in the starting of 2020 even prior to Covid-19.

In the new context of Covid-19, the Division experienced to deal with a slowdown in most of the Industries. In fact, this small business section is substantially additional dependent from the cycle and clients started out in March to postpone discretionary jobs. The Team considers that the most impacted things to do will be Know-how Expert Products and services necessitating engineers operating on buyer websites, that are not able to be performed on a distant mode (circa thirty% of Enterprise & System Answers profits). On the reverse, Software Enhancement and Routine maintenance, centered on extensive term contracts ought to be resilient (circa 40% of Enterprise & System Answers profits). In involving, a large portion of critical Digital Initiatives (circa thirty% of Enterprise & System Answers profits) can be performed on a distant mode, but the quantity of the small business will rely in the up coming months from the buyer calls for on new jobs.

The small business in Large Details & Cybersecurity (BDS) remained powerful with profits up +sixteen.three% organically at € 259 million in the first quarter of 2020. In the existing context, the distant operating as effectively as the raise of cyberattacks led corporations to reinforce the protection of their infrastructure and information. As illustrations, clients requested for additional answers of identification in quick mode, and consulting on the solidity of their protection infrastructure.

In Large Details, there was no discontinuity in the supply chain many thanks to pro-energetic inventory management. The desire remains powerful in Substantial General performance Computing. As an case in point, distant accessibility to SAP HANA calls for added processing electricity and as a result much larger demands of Sequana S in-memory servers. At last, Mission Essential Procedure small business also recorded a superior profits progress.

Business activity

All through the first quarter of 2020, the Team order entry reached € 2,908 million representing a Book to Invoice ratio of 103%, compared to 86% achieved about the similar time period final year.

The key new contracts signed about the time period were being notably in North America with a large American company in Defense Sector (Telecom, Media & Know-how), in Central Europe with Norddeutsche Landesbank (Economical Products and services & Insurance policy) and a world wide european pharmaceutical company (Wellbeing & Daily life Sciences) and in Southern Europe with a significant utility in France and with Ile-de-France Mobilités (Assets & Products and services), as effectively as with a French banking institution (Economical Products and services & Insurance policy).

Agreement renewals of the quarter bundled large signatures with notably the first portion of the renewal of Texas Office of Facts Assets deal (Community Sector & Defense), the renewal of Conduent deal (Telecom, Media & Know-how) in North America, a deal with a Worldwide European business in cash goods for SAP HANA (Manufacturing) in Central Europe, as effectively as with the French UGAP (Community Sector & Defense) in Southern Europe.

In line with this dynamic industrial activity, the full backlog amounted to € 22.1 billion at the end of March 2020, representing 1.nine year of profits. The full qualified pipeline reached € seven.six billion, representing seven.eight months of profits.

Human assets

The complete headcount was 108,602 at the end of March 2020, broadly secure compared to 108,317 at the end of December 2019.

In the first quarter of 2020, the Team hired five,043 staff, generally in offshore countries.

How Atos handles Covid-19 influence

Because end of January, the Team management, supported by Team Human Assets, has been focusing on the wellbeing and basic safety of staff while making certain a proper implementation of pre-outlined small business continuity options in each Division.

The Team also activated the “Always Ready” plan, pulling together all Team answers specifically tailored to this distressed predicament and getting proactively available to clients to assistance them go by the crisis: guidance to generalized homeworking which include collaboration options, particular guidance to community & wellbeing establishments, reinforcement of cybersecurity protections, etc. Customers’ feed-back and gratification with regards to Atos teams reactivity has been overwhelmingly optimistic. Atos is also involved into a lot of governmental jobs across the world to struggle from the virus, and put together the progressive reduction of constraints and lockdowns.

To safeguard its running margin, the Team has taken powerful steps on its expense base in the subsequent regions:

  • Robust centralized monitoring of personnel prices (using the services of freeze, cancellation of income boosts, influence on variable payment, vacations, etc.)
  • Replacement of subcontractors by have freed up staff
  • Cancellation of non buyer related discretionary fees
  • Robust preserving plan on non personnel prices.

In complete, the Team released a plan representing a complete amount of money of c. four hundred million euros of price savings in 2020.

Updated 2020 aims post Covid-19

As the 2020 aims disclosed on February 19, 2020 were being pre Covid-19 effect, the Team updates now its 3 aims for the full year 2020, centered on the existing macroeconomic state of affairs of a progressive recovery about H2 2020 and 2021, as effectively as the management’s every day discussions with Team clients:

  • Profits natural and organic evolution: involving -2% and -4% (vs . c. +2% pre Covid-19)
  • Functioning margin price: nine% to nine.five% of profits (vs . +20 bps to + 40 bps previously mentioned 2019 (10.three% described) pre Covid-19)
  • Totally free money move: € .five billion to € .six billion (vs . c. € .seven billion pre Covid-19)[*].

The Team suspends its targets for 2021, the final year of the 3-year plan introduced at the Trader Working day held on January thirty, 2019. The Team will existing its vision as effectively as its mid-term targets at the 2020 Analyst Working day (day to be rescheduled).

Postponement of Yearly General Assembly and fantastic cancellation of dividend payment in 2020

Due to the fantastic situation connected to the Covid-19, the Board of Directors, which met on March 31, 2020, has resolved to postpone the Yearly General Assembly originally scheduled on Might 14, 2020 to June 26, 2020.

In these unparalleled situation, throughout its session on April 21, 2020, the Board of Directors took the fantastic final decision not to suggest the 1.40 euro for every share dividend which was originally viewed as to be submitted to the Yearly General Assembly. In addition, the Main Government Officer as effectively as other associates of the General Management Committee have resolved to decrease by thirty% their payment throughout the existing 3-thirty day period time period from March to Might 2020. The Chairman of Atos’ Board of Directors has manufactured the similar final decision.

The Team confirms that the cancellation of the dividend this year is an exception to its dividend plan with a pay out-out ratio involving twenty five% and thirty% of Web earnings Team share.

 

Appendix

Profits at continuous scope and trade prices reconciliation

In € million Q1 2020 Q1 2019 % alter
Statutory profits 2,834 2,818 +.six%
Exchange prices effect 26  
 
Profits at continuous trade prices 2,834 2,843 -.three%
   
Scope effect 14  
Exchange prices effect on acquired/disposed perimeters 1  
Profits at continuous scope and trade prices 2,834 2,858 -.eight%
       

Scope consequences amounted to €+14 million for profits and are generally related to the acquisition of Maven Wave, consolidated as of February 1, 2020 (2 months for €+18 million), the acquisition of IDnomic, consolidated as of October 1, 2019 (three months for €+4 million), the acquisition of X-PERION, consolidated as of December 1, 2019 (three months for €+2 million), the disposal of some particular Unified Communication & Collaboration things to do mostly in Q1 2020 (complete restatement of €-4 million) as effectively as former ITO things to do in the British isles starting of H2 2019 (three months for €-4 million), and ultimately the disposal and decommissioning of non-strategic things to do inside of CVC.

Forex trade prices consequences mostly arrived from the American dollar as effectively as the British pound and positively contributed to profits for €+26 million.

 

Meeting simply call

Right now, Wednesday, April 22, 2020, the Team will keep a meeting simply call in English at 08:00 am (CET – Paris), chaired by Elie Girard, CEO, in order to remark on Atos’ Q1 2020 profits and remedy questions from the monetary local community.

You can be a part of the webcast of the meeting:

  • on net, in the Buyers part
  • by smartphones or tablets by the scan of:
  • by phone with the dial-in, five-10 minutes prior the starting off time:
    • France             +33 1 70 70 07 81       code 12652364
    • Germany             +forty nine sixty nine 2222 2625       code 12652364
    • British isles             +forty four 844 481 9752       code 12652364
    • US             +1 646 741 3167         code 12652364
    • Other countries +forty four 2071 928338        code 12652364

Immediately after the meeting, a replay of the webcast will be readily available on atos.net, in the Buyers part.

 

Forthcoming occasions

June 26, 2020              Yearly General Assembly

July 27, 2020               1st 50 % 2020 final results

October 22, 2020         Third quarter 2020 profits

To be scheduled            2020 Analyst Working day

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