First quarter of 2020 – Atos

A resilient profile and a strong equilibrium sheet to face an unprecedented condition

Earnings at € two,834 million

-.eight% natural progress

Reserve to monthly bill ratio at 103%

Renewals of big contracts in North The usa

Proper business mix to assist customers in Covid-19 context

Essential value steps being applied to protect running margin

SPRING transformation software to an Business approach properly on monitor

Update of 2020 targets article Covid-19

 

Paris, April 22, 2020,

Atos, a world wide leader in electronic transformation, right now announces the revenue of its initial quarter of 2020.

Elie Girard, CEO, reported: “In this unprecedented ecosystem wherever uncertainty prevails, our initial precedence has been to protect our workforce whilst presenting complete continuity of support to our purchasers. The Team is solidly positioned to navigate effortlessly by means of the disaster many thanks to deep consumer interactions across all industries, a resilient business mix and a strong equilibrium sheet that provides a strong monetary flexibility.

Our 110,000 colleagues across the entire world have supplied an speedy and outstanding response to customers’ issues and will need for assist by means of our “Always Ready” software built previously due to the fact the beginning of the calendar year. Now our minds and efforts are turning to the article-Covid instances, actively planning for the “new normal” which will see an acceleration in specific customers’ requirements, specifically info platforms, cybersecurity, cloud migration, electronic place of work and decarbonization.

We revise right now our targets for 2020 demonstrating the resilience of the Team and the willingness to share any impact pretty across stakeholders. I am confident that Atos will emerge from this world wide disaster stronger than ever and prepared to move ahead to the next action.”

Q1 2020 revenue was € 2,834 million, down -.eight% organically. In the context of Covid-19 disaster and restrictions and lockdowns in March in most of the nations wherever the Team operates, revenue decreased only a bit many thanks to the resilient profile of its organizations primarily based on multi-calendar year contracts combined with its solid business in Massive Information and Cybersecurity. Also, and in spite of the disaster, the Team accelerated its commercial dynamism with buy entry at € 2,908 million foremost to a ebook to monthly bill ratio of 103%, appreciably up when compared to very last calendar year at 86%.

Q1 2020 revenue overall performance by Business

In € million Q1 2020 Q1 2019* Natural
evolution
Producing 539 555 -two.nine%
Financial Products and services & Insurance policies 527 542 -two.six%
Public Sector & Defense 584 566 +3.two%
Telecom, Media & Engineering 443 439 +.eight%
Assets & Products and services 418 416 +.four%
Health care & Lifestyle Sciences 323 340 -four.nine%
Complete Team two,834 two,858 -.eight%
* At frequent scope and trade rates

 

Producing attained € 539 million of revenue, down -two.nine% at frequent scope and trade rates. The Business benefitted from a great overall performance in Automotive with the ramp-up of a German car or truck business and Rheinmetall on info management contracts, compensating the impact in Daimler due to Covid-19 and the ramp down of PSA. Conversely, Producing was impacted by lower volumes with Siemens, a slowdown in the Aerospace sector due to Covid-19, and a number of shifts of products product sales in the direction of the stop of the quarter.

Financial Products and services & Insurance policies revenue was € 527 million in the initial quarter 2020, down by -two.six% organically. Northern Europe and Southern Europe benefited respectively from the ramp-up with Aegon in the United Kingdom, as properly as the improvement of exercise with a payment business in France which have more than compensated for the reduction of volumes from banking institutions in Central Europe. Escalating markets experienced from non-repeated product sales done very last calendar year in APAC and Middle East & Africa. In North The usa, undertaking primarily based actions lessen previously noticed in previous quarters was accelerated in March due to selections from a number of Financial Services firms to postpone or lessen discretionary charges in the context of Covid-19.

Public Sector & Defense revenue was € 584 million, up +3.two% at frequent scope and trade rates. The progress was pushed by the strong overall performance recorded in Northern Europe, many thanks to the continuation of the contract with European Heart for Medium array Weather conditions forecast as properly as with EU Lisa and clever info system in Benelux. North The usa accomplished stability in spite of lower volumes, many thanks to further product sales on present contracts. The condition was more hard in Southern Europe, impacted by the ramp-down of High Effectiveness Computing exercise as properly as non-repeated product sales done very last calendar year. Central Europe was negatively impacted by lower volumes, and last but not least Escalating Markets was impacted by revenue recorded very last calendar year for the Tokyo Olympic Video games planning and not repeated this calendar year.

Telecom, Media & Engineering attained € 443 million, up +.eight% organically, with a contrasted overall performance by geography and by exercise. High Tech & Engineering posted a strong progress, pushed by Unified Interaction & Collaboration choices in Central Europe, sustained by natural progress of newly obtained business Maven Wave in North The usa and contract ramp-up with a huge companion, as properly as further product sales in Southern Europe. Media amplified as properly, benefitting from new business improvement, coupled with larger volumes with present customers in North The usa. Telecom exercise was mostly impacted by some ramp-downs in Southern Europe.

Earnings in Assets & Products and services attained € 418 million and amplified by +.four% organically. Business in Power & Utilities sector fueled the progress. In individual, the Business shipped a High Effectiveness Computer in South The usa. Digital place of work expert services ramped-up with a big Power provider in North The usa and with Nationwide Grid in Northern Europe. The condition in Retail, Transportation & Hospitality sectors was more hard in the context of Covid-19. Without a doubt, whilst the ramp-up of a new IoT contract signed in the spot of predictive maintenance benefitted to North The usa, the Business confronted quantity reductions in Europe.

Health care & Lifestyle Sciences revenue was € 323 million, down by -four.nine% when compared to Q1 2019, impacted by quantity reductions on extremely specific contracts in each North The usa and Northern Europe, whilst the business benefitted from the ramp-up of a world wide contract with Bayer and a electronic place of work contract signed very last calendar year in Central Europe, and the ramp-up of an Australian Public Company contract in Escalating Markets. Southern Europe benefitted from a strong exercise in electronic assignments and High Effectiveness Computing.

 

Q1 2020 revenue overall performance by Regional Business Unit

 

In € million Q1 2020 Q1 2019* Natural
evolution
North The usa 681 699 -two.six%
Northern Europe 698 696 +.3%
Southern Europe 594 609 -two.six%
Central Europe 667 660 +1.%
Escalating Markets 194 192 +1.%
Complete Team two,834 two,858 -.eight%
* At frequent scope and trade rates

The initial quarter of 2020 showed distinct revenue evolution by Regional Business Models which can be summarized as follows:

  • In North The usa, revenue attained € 681 million, decreasing by -two.six% organically mostly coming from Covid-19 induced undertaking stops and quantity reductions in a number of Industries. The Business Unit accomplished progress in Telecom, Media & Engineering and Assets & Products and services many thanks to new brand, larger volumes and ramp up of present contracts
  • In Northern Europe, revenue was about stable at € 698 million. Strong business was recorded in Public Sector & Defense mostly led by the continuation of the HPC contract with European Centre for Medium Range Weather conditions Forecast, as properly as by deliveries to European Union Establishments. Telecom, Media & Engineering and Manufacturing confronted some contracts ending and Health care & Lifestyle Sciences a reduction on Business System Outsourcing contracts
  • In Southern Europe, revenue attained € 594 million, decreasing by -two.six% Health care & Lifestyle Sciences posted a double-digit progress many thanks to electronic assignments shipped and High Effectiveness Computing actions. The geography was impacted by non-repeated product sales also on High Effectiveness Computing actions done very last calendar year in a number of Industries
  • In Central Europe, the geography amplified organically by +1.% foremost to a € 667 million Producing benefitted from a number of ramp-up of infrastructure contracts and further assignments. Earnings in Telecom, Media & Engineering also amplified, pushed by Unified Interaction & Collaboration business. Health care & Lifestyle Sciences posted a double-digit progress mostly fueled by new contracts. Public Sector & Defense was impacted by non-repeated product sales and assignments accomplished very last calendar year whilst new assignments in SAP HANA and in Digital had been done in Germany and in Austria. Lastly, Assets & Products and services was impacted by a lower desire in Unify Interaction channels
  • Escalating Markets attained € 194 million revenue, +1.% Producing posted a solid progress, pushed by a larger degree of product sales as properly as stronger desire in electronic assignments mostly in Asia-Pacific and South The usa. Earnings in Source & Products and services strongly amplified fueled by High Effectiveness Computing exercise in South The usa whilst the condition was more hard in Financial Services mostly in Asia Pacific.

Q1 2020 revenue overall performance by Division

 

In € million Q1 2020 Q1 2019* Natural
evolution
Infrastructure & Information Management 1,558 1,566 -.five%
Company & System Solutions 1,016 1,069 -four.nine%
Massive Information & Cybersecurity 259 223 +sixteen.3%
Complete Team two,834 two,858 -.eight%
* At frequent scope and trade rates

In Infrastructure & Information Management (IDM), revenue was € 1,558 million, -.five% organically. The Division ongoing to roll-out its transformation design by extending Hybrid Cloud Orchestration as properly as escalating Digital Workplace implementation.

The specific condition due to Covid-19 pandemic demanded a solid business continuity for significant infrastructures for its customers. Without a doubt, the Division recorded a strong desire on Digital Workplace alternatives (accessing programs from any where), enterprise communication choices with Unified Collaboration & Interaction, network connections, and many others. These actions are linked to the remote operating that has been set in location by a lot of companies to face the lockdown and retain their exercise.

Lastly, in the recent context, the Division recorded a lot less revenue produced by products product sales and fertilization in present contracts in March.

In Company & System Solutions (B&PS) revenue was € 1,016 million, -four.nine% organically. As a reminder, the Division was down -1.two% in This autumn 2019 due to the headwinds in Financial Services in North The usa as properly as in Automotive business in Germany, and as a result did not anticipate any advancement in the beginning of 2020 even just before Covid-19.

In the new context of Covid-19, the Division had to face a slowdown in most of the Industries. Without a doubt, this business section is significantly more dependent from the cycle and customers begun in March to postpone discretionary assignments. The Team considers that the most impacted actions will be Engineering Professional Products and services demanding engineers operating on consumer sites, that cannot be done on a remote manner (circa thirty% of Business & System Solutions revenue). On the opposite, Software Development and Routine maintenance, primarily based on prolonged term contracts should be resilient (circa forty% of Business & System Solutions revenue). In among, a huge portion of significant Digital Tasks (circa thirty% of Business & System Solutions revenue) can be done on a remote manner, but the quantity of the business will depend in the next months from the consumer needs on new assignments.

The business in Massive Information & Cybersecurity (BDS) remained strong with revenue up +sixteen.3% organically at € 259 million in the initial quarter of 2020. In the recent context, the remote operating as properly as the raise of cyberattacks led companies to enhance the stability of their infrastructure and info. As examples, customers requested for more alternatives of identification in swift manner, and consulting on the solidity of their stability infrastructure.

In Massive Information, there was no discontinuity in the source chain many thanks to professional-active inventory management. The desire stays strong in High Effectiveness Computing. As an example, remote accessibility to SAP HANA calls for further processing ability and as a result much larger requirements of Sequana S in-memory servers. Lastly, Mission Vital Process business also recorded a substantial revenue progress.

Business exercise

Through the initial quarter of 2020, the Team buy entry attained € 2,908 million representing a Reserve to Bill ratio of 103%, when compared to 86% accomplished around the exact time period very last calendar year.

The primary new contracts signed around the time period had been notably in North The usa with a huge American business in Defense Sector (Telecom, Media & Engineering), in Central Europe with Norddeutsche Landesbank (Financial Services & Insurance policies) and a world wide european pharmaceutical business (Wellness & Lifestyle Sciences) and in Southern Europe with a big utility in France and with Ile-de-France Mobilités (Assets & Products and services), as properly as with a French banking institution (Financial Services & Insurance policies).

Agreement renewals of the quarter involved huge signatures with notably the initial portion of the renewal of Texas Section of Data Assets contract (Public Sector & Defense), the renewal of Conduent contract (Telecom, Media & Engineering) in North The usa, a contract with a World-wide European business in money items for SAP HANA (Producing) in Central Europe, as properly as with the French UGAP (Public Sector & Defense) in Southern Europe.

In line with this dynamic commercial exercise, the complete backlog amounted to € 22.1 billion at the stop of March 2020, representing 1.nine calendar year of revenue. The complete capable pipeline attained € 7.six billion, representing 7.eight months of revenue.

Human resources

The complete headcount was 108,602 at the stop of March 2020, broadly stable when compared to 108,317 at the stop of December 2019.

In the initial quarter of 2020, the Team hired five,043 workers, mostly in offshore nations.

How Atos handles Covid-19 impact

Given that stop of January, the Team management, supported by Team Human Assets, has been focusing on the wellbeing and security of workforce whilst guaranteeing a correct implementation of pre-defined business continuity options in every single Division.

The Team also activated the “Always Ready” software, pulling collectively all Team alternatives particularly tailored to this distressed condition and being proactively offered to customers to enable them go by means of the disaster: assist to generalized homeworking together with collaboration functions, specific assist to community & wellbeing institutions, reinforcement of cybersecurity protections, and many others. Customers’ responses and satisfaction with regards to Atos groups reactivity has been overwhelmingly beneficial. Atos is also associated into quite a few governmental assignments across the entire world to fight towards the virus, and get ready the progressive reduction of restrictions and lockdowns.

To protect its running margin, the Team has taken strong steps on its value base in the next regions:

  • Strong centralized checking of personnel charges (hiring freeze, cancellation of wage will increase, impact on variable payment, holidays, and many others.)
  • Replacement of subcontractors by personal freed up workers
  • Cancellation of non consumer associated discretionary charges
  • Strong preserving software on non personnel charges.

In complete, the Team launched a software representing a complete amount of money of c. four hundred million euros of cost savings in 2020.

Up-to-date 2020 targets article Covid-19

As the 2020 targets disclosed on February 19, 2020 had been pre Covid-19 impact, the Team updates right now its a few targets for the complete calendar year 2020, primarily based on the recent macroeconomic situation of a progressive restoration around H2 2020 and 2021, as properly as the management’s daily conversations with Team customers:

  • Earnings natural evolution: among -two% and -four% (vs . c. +two% pre Covid-19)
  • Functioning margin price: nine% to nine.five% of revenue (vs . +20 bps to + forty bps previously mentioned 2019 (ten.3% claimed) pre Covid-19)
  • Free cash movement: € .five billion to € .six billion (vs . c. € .7 billion pre Covid-19)[*].

The Team suspends its targets for 2021, the very last calendar year of the a few-calendar year strategy offered at the Trader Working day held on January thirty, 2019. The Team will existing its eyesight as properly as its mid-term targets at the 2020 Analyst Working day (date to be rescheduled).

Postponement of Yearly Common Assembly and exceptional cancellation of dividend payment in 2020

Due to the exceptional conditions linked to the Covid-19, the Board of Administrators, which fulfilled on March 31, 2020, has made a decision to postpone the Yearly Common Assembly in the beginning scheduled on May well 14, 2020 to June 26, 2020.

In these unprecedented conditions, all through its session on April 21, 2020, the Board of Administrators took the exceptional selection not to propose the 1.forty euro for every share dividend which was in the beginning regarded to be submitted to the Yearly Common Assembly. In addition, the Chief Government Officer as properly as other users of the Common Management Committee have made a decision to lessen by thirty% their payment all through the recent a few-thirty day period time period from March to May well 2020. The Chairman of Atos’ Board of Administrators has produced the exact selection.

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

 

Appendix

Earnings at frequent scope and trade rates reconciliation

In € million Q1 2020 Q1 2019 % improve
Statutory revenue two,834 two,818 +.six%
Exchange rates impact 26  
 
Earnings at frequent trade rates two,834 two,843 -.3%
   
Scope impact 14  
Exchange rates impact on obtained/disposed perimeters 1  
Earnings at frequent scope and trade rates two,834 two,858 -.eight%
       

Scope effects amounted to €+14 million for revenue and are mostly associated to the acquisition of Maven Wave, consolidated as of February 1, 2020 (two months for €+18 million), the acquisition of IDnomic, consolidated as of Oct 1, 2019 (3 months for €+four million), the acquisition of X-PERION, consolidated as of December 1, 2019 (3 months for €+two million), the disposal of some specific Unified Interaction & Collaboration actions mainly in Q1 2020 (complete restatement of €-four million) as properly as previous ITO actions in the United kingdom beginning of H2 2019 (3 months for €-four million), and last but not least the disposal and decommissioning of non-strategic actions inside CVC.

Currency trade rates effects mainly came from the American dollar as properly as the British pound and positively contributed to revenue for €+26 million.

 

Conference get in touch with

Now, Wednesday, April 22, 2020, the Team will hold a conference get in touch with in English at 08:00 am (CET – Paris), chaired by Elie Girard, CEO, in buy to comment on Atos’ Q1 2020 revenue and reply concerns from the monetary local community.

You can sign up for the webcast of the conference:

  • on web, in the Buyers portion
  • by smartphones or tablets by means of the scan of:
  • by phone with the dial-in, five-ten minutes prior the starting time:
    • France             +33 1 70 70 07 81       code 12652364
    • Germany             +forty nine 69 2222 2625       code 12652364
    • United kingdom             +44 844 481 9752       code 12652364
    • US             +1 646 741 3167         code 12652364
    • Other nations +44 2071 928338        code 12652364

Soon after the conference, a replay of the webcast will be available on atos.web, in the Buyers portion.

 

Forthcoming events

June 26, 2020              Yearly Common Assembly

July 27, 2020               Initial half 2020 results

Oct 22, 2020         Third quarter 2020 revenue

To be scheduled            2020 Analyst Working day