First quarter of 2020 – Atos

A resilient profile and a sturdy balance sheet to face an unprecedented circumstance

Income at € 2,834 million

-.eight% natural progress

E book to bill ratio at 103%

Renewals of key contracts in North The us

Appropriate business enterprise mix to assist clients in Covid-19 context

Essential charge actions becoming implemented to protect running margin

SPRING transformation plan to an Market approach nicely on monitor

Update of 2020 aims post Covid-19

 

Paris, April 22, 2020,

Atos, a worldwide leader in digital transformation, right now announces the earnings of its 1st quarter of 2020.

Elie Girard, CEO, said: “In this unprecedented natural environment wherever uncertainty prevails, our 1st precedence has been to protect our employees while offering comprehensive continuity of service to our shoppers. The Team is solidly positioned to navigate easily through the disaster thanks to deep customer relationships across all industries, a resilient business enterprise mix and a robust balance sheet that gives a sturdy economical versatility.

Our one hundred ten,000 colleagues across the environment have provided an quick and remarkable response to customers’ difficulties and have to have for assist through our “Always Ready” plan designed currently because the beginning of the yr. Now our minds and attempts are turning to the post-Covid moments, actively planning for the “new normal” which will see an acceleration in distinct customers’ requirements, specifically data platforms, cybersecurity, cloud migration, digital workplace and decarbonization.

We revise right now our aims for 2020 demonstrating the resilience of the Team and the willingness to share any impression rather across stakeholders. I am confident that Atos will arise from this worldwide disaster stronger than ever and all set to transfer ahead to the up coming stage.”

Q1 2020 revenue was € 2,834 million, down -.eight% organically. In the context of Covid-19 disaster and constraints and lockdowns in March in most of the international locations Vehicle Accident Lawyer in South Carolina wherever the Team operates, earnings diminished only a little bit thanks to the resilient profile of its corporations dependent on multi-yr contracts combined with its stable business enterprise in Big Info and Cybersecurity. Moreover, and in spite of the disaster, the Team accelerated its business dynamism with purchase entry at € 2,908 million main to a guide to bill ratio of 103%, noticeably up in comparison to final yr at 86%.

Q1 2020 earnings effectiveness by Market

In € million Q1 2020 Q1 2019* Natural and organic
evolution
Producing 539 555 -2.nine%
Economical Expert services & Insurance 527 542 -2.6%
General public Sector & Protection 584 566 +3.2%
Telecom, Media & Know-how 443 439 +.eight%
Assets & Expert services 418 416 +.four%
Healthcare & Existence Sciences 323 340 -four.nine%
Full Team 2,834 2,858 -.eight%
* At frequent scope and trade fees

 

Producing achieved € 539 million of earnings, down -2.nine% at frequent scope and trade fees. The Market benefitted from a great effectiveness in Automotive with the ramp-up of a German vehicle enterprise and Rheinmetall on data administration contracts, compensating the impression in Daimler because of to Covid-19 and the ramp down of PSA. Conversely, Producing was impacted by lower volumes with Siemens, a slowdown in the Aerospace sector because of to Covid-19, and quite a few shifts of products product sales to the close of the quarter.

Economical Expert services & Insurance earnings was € 527 million in the 1st 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 nicely as the enhancement of exercise with a payment enterprise in France which have extra than compensated for the reduction of volumes from banking institutions in Central Europe. Expanding markets experienced from non-repeated product sales executed final yr in APAC and Middle East & Africa. In North The us, challenge dependent routines lessen currently observed in earlier quarters was accelerated in March because of to selections from quite a few Economical Expert services corporations to postpone or minimize discretionary bills in the context of Covid-19.

General public Sector & Protection earnings was € 584 million, up +3.2% at frequent scope and trade fees. The progress was driven by the sturdy effectiveness recorded in Northern Europe, thanks to the continuation of the deal with European Centre for Medium vary Temperature forecast as nicely as with EU Lisa and smart data system in Benelux. North The us obtained balance in spite of lower volumes, thanks to more product sales on present contracts. The circumstance was extra complicated in Southern Europe, impacted by the ramp-down of Higher Overall performance Computing exercise as nicely as non-repeated product sales executed final yr. Central Europe was negatively impacted by lower volumes, and finally Expanding Marketplaces was impacted by earnings recorded final yr for the Tokyo Olympic Games preparation and not repeated this yr.

Telecom, Media & Know-how achieved € 443 million, up +.eight% organically, with a contrasted effectiveness by geography and by exercise. Higher Tech & Know-how posted a sturdy progress, driven by Unified Communication & Collaboration choices in Central Europe, sustained by natural progress of newly obtained enterprise Maven Wave in North The us and deal ramp-up with a huge partner, as nicely as more product sales in Southern Europe. Media amplified as nicely, benefitting from new business enterprise enhancement, coupled with bigger volumes with present clients in North The us. Telecom exercise was primarily impacted by some ramp-downs in Southern Europe.

Income in Assets & Expert services achieved € 418 million and amplified by +.four% organically. Enterprise in Strength & Utilities sector fueled the progress. In individual, the Market delivered a Higher Overall performance Computer system in South The us. Electronic workplace services ramped-up with a key Strength supplier in North The us and with Nationwide Grid in Northern Europe. The circumstance in Retail, Transportation & Hospitality sectors was extra complicated in the context of Covid-19. Indeed, while the ramp-up of a new IoT deal signed in the space of predictive routine maintenance benefitted to North The us, the Market confronted quantity reductions in Europe.

Healthcare & Existence Sciences earnings was € 323 million, down by -four.nine% in comparison to Q1 2019, impacted by quantity reductions on very distinct contracts in both of those North The us and Northern Europe, while the industry benefitted from the ramp-up of a worldwide deal with Bayer and a digital workplace deal signed final yr in Central Europe, and the ramp-up of an Australian General public Agency deal in Expanding Marketplaces. Southern Europe benefitted from a sturdy exercise in digital tasks and Higher Overall performance Computing.

 

Q1 2020 earnings effectiveness by Regional Enterprise Device

 

In € million Q1 2020 Q1 2019* Natural and organic
evolution
North The us 681 699 -2.6%
Northern Europe 698 696 +.3%
Southern Europe 594 609 -2.6%
Central Europe 667 660 +1.%
Expanding Marketplaces 194 192 +1.%
Full Team 2,834 2,858 -.eight%
* At frequent scope and trade fees

The 1st quarter of 2020 confirmed various earnings evolution by Regional Enterprise Models which can be summarized as follows:

  • In North The us, earnings achieved € 681 million, reducing by -2.6% organically primarily coming from Covid-19 triggered challenge stops and quantity reductions in quite a few Industries. The Enterprise Device obtained progress in Telecom, Media & Know-how and Assets & Expert services thanks to new brand, bigger volumes and ramp up of present contracts
  • In Northern Europe, earnings was around steady at € 698 million. Strong business enterprise was recorded in General public Sector & Protection primarily led by the continuation of the HPC deal with European Centre for Medium Assortment Temperature Forecast, as nicely as by deliveries to European Union Establishments. Telecom, Media & Know-how and Manufacturing confronted some contracts ending and Healthcare & Existence Sciences a reduction on Enterprise Process Outsourcing contracts
  • In Southern Europe, earnings achieved € 594 million, reducing by -2.6% Healthcare & Existence Sciences posted a double-digit progress thanks to digital tasks delivered and Higher Overall performance Computing routines. The geography was impacted by non-repeated product sales also on Higher Overall performance Computing routines executed final yr in quite a few Industries
  • In Central Europe, the geography amplified organically by +1.% main to a € 667 million Producing benefitted from quite a few ramp-up of infrastructure contracts and more tasks. Income in Telecom, Media & Know-how also amplified, driven by Unified Communication & Collaboration business enterprise. Healthcare & Existence Sciences posted a double-digit progress primarily fueled by new contracts. General public Sector & Protection was impacted by non-repeated product sales and tasks obtained final yr while new tasks in SAP HANA and in Electronic ended up executed in Germany and in Austria. Eventually, Assets & Expert services was impacted by a lower demand from customers in Unify Communication channels
  • Expanding Marketplaces achieved € 194 million earnings, +1.% Producing posted a stable progress, pushed by a bigger degree of product sales as nicely as stronger demand from customers in digital tasks primarily in Asia-Pacific and South The us. Income in Source & Expert services strongly amplified fueled by Higher Overall performance Computing exercise in South The us while the circumstance was extra complicated in Economical Expert services primarily in Asia Pacific.

Q1 2020 earnings effectiveness by Division

 

In € million Q1 2020 Q1 2019* Natural and organic
evolution
Infrastructure & Info Administration 1,558 1,566 -.five%
Enterprise & System Methods 1,016 1,069 -four.nine%
Big Info & Cybersecurity 259 223 +16.3%
Full Team 2,834 2,858 -.eight%
* At frequent scope and trade fees

In Infrastructure & Info Administration (IDM), earnings was € 1,558 million, -.five% organically. The Division ongoing to roll-out its transformation design by extending Hybrid Cloud Orchestration as nicely as growing Electronic Office implementation.

The distinct circumstance because of to Covid-19 pandemic required a stable business enterprise continuity for vital infrastructures for its clients. Indeed, the Division recorded a sturdy demand from customers on Electronic Office remedies (accessing programs from everywhere), company interaction choices with Unified Collaboration & Communication, community connections, and so forth. These routines are connected to the remote working that has been place in place by a ton of businesses to face the lockdown and keep their exercise.

Eventually, in the recent context, the Division recorded considerably less earnings produced by products product sales and fertilization in present contracts in March.

In Enterprise & System Methods (B&PS) earnings was € 1,016 million, -four.nine% organically. As a reminder, the Division was down -1.2% in Q4 2019 because of to the headwinds in Economical Expert services in North The us as nicely as in Automotive industry in Germany, and therefore did not assume any advancement in the beginning of 2020 even before Covid-19.

In the new context of Covid-19, the Division had to face a slowdown in most of the Industries. Indeed, this business enterprise segment is much extra dependent from the cycle and clients begun in March to postpone discretionary tasks. The Team considers that the most impacted routines will be Know-how Skilled Expert services requiring engineers working on customer internet sites, that can not be executed on a remote manner (circa 30% of Enterprise & System Methods earnings). On the reverse, Application Enhancement and Upkeep, dependent on prolonged term contracts ought to be resilient (circa 40% of Enterprise & System Methods earnings). In in between, a huge part of vital Electronic Initiatives (circa 30% of Enterprise & System Methods earnings) can be executed on a remote manner, but the quantity of the business enterprise will depend in the up coming months from the customer demands on new tasks.

The business enterprise in Big Info & Cybersecurity (BDS) remained sturdy with earnings up +16.3% organically at € 259 million in the 1st quarter of 2020. In the recent context, the remote working as nicely as the increase of cyberattacks led businesses to boost the protection of their infrastructure and data. As examples, clients asked for extra remedies of identification in rapid manner, and consulting on the solidity of their protection infrastructure.

In Big Info, there was no discontinuity in the source chain thanks to professional-active inventory administration. The demand from customers stays sturdy in Higher Overall performance Computing. As an instance, remote accessibility to SAP HANA involves more processing electricity and therefore larger sized requirements of Sequana S in-memory servers. Eventually, Mission Essential Process business enterprise also recorded a superior earnings progress.

Professional exercise

Throughout the 1st quarter of 2020, the Team purchase entry achieved € 2,908 million representing a E book to Invoice ratio of 103%, in comparison to 86% obtained above the very same period final yr.

The most important new contracts signed above the period ended up notably in North The us with a huge American enterprise in Protection Sector (Telecom, Media & Know-how), in Central Europe with Norddeutsche Landesbank (Economical Expert services & Insurance) and a worldwide european pharmaceutical enterprise (Health & Existence Sciences) and in Southern Europe with a key utility in France and with Ile-de-France Mobilités (Assets & Expert services), as nicely as with a French banking establishment (Economical Expert services & Insurance).

Deal renewals of the quarter included huge signatures with notably the 1st part of the renewal of Texas Division of Information and facts Assets deal (General public Sector & Protection), the renewal of Conduent deal (Telecom, Media & Know-how) in North The us, a deal with a World wide European business in funds items for SAP HANA (Producing) in Central Europe, as nicely as with the French UGAP (General public Sector & Protection) in Southern Europe.

In line with this dynamic business exercise, the comprehensive backlog amounted to € 22.1 billion at the close of March 2020, representing 1.nine yr of earnings. The comprehensive experienced pipeline achieved € seven.6 billion, representing seven.eight months of earnings.

Human methods

The complete headcount was 108,602 at the close of March 2020, broadly steady in comparison to 108,317 at the close of December 2019.

In the 1st quarter of 2020, the Team hired five,043 workers, primarily in offshore international locations.

How Atos handles Covid-19 impression

Because close of January, the Team administration, supported by Team Human Assets, has been focusing on the health and security of employees while ensuring a proper implementation of pre-outlined business enterprise continuity programs in every single Division.

The Team also activated the “Always Ready” plan, pulling jointly all Team remedies particularly adapted to this distressed circumstance and becoming proactively presented to clients to support them go through the disaster: assist to generalized homeworking together with collaboration functions, distinct assist to community & health institutions, reinforcement of cybersecurity protections, and so forth. Customers’ feed-back and gratification with regards to Atos groups reactivity has been overwhelmingly beneficial. Atos is also involved into lots of governmental tasks across the environment to combat from the virus, and put together the progressive relief of constraints and lockdowns.

To protect its running margin, the Team has taken sturdy actions on its charge foundation in the adhering to locations:

  • Strong centralized checking of personnel fees (using the services of freeze, cancellation of wage increases, impression on variable payment, holidays, and so forth.)
  • Replacement of subcontractors by individual freed up workers
  • Cancellation of non customer related discretionary bills
  • Strong preserving plan on non personnel fees.

In complete, the Team released a plan representing a complete volume of c. four hundred million euros of discounts in 2020.

Current 2020 aims post Covid-19

As the 2020 aims disclosed on February 19, 2020 ended up pre Covid-19 impact, the Team updates right now its three aims for the comprehensive yr 2020, dependent on the recent macroeconomic scenario of a progressive recovery above H2 2020 and 2021, as nicely as the management’s day by day conversations with Team clients:

  • Income natural evolution: in between -2% and -four% (versus c. +2% pre Covid-19)
  • Functioning margin amount: nine% to nine.five% of earnings (versus +20 bps to + 40 bps over 2019 (ten.3% noted) pre Covid-19)
  • Cost-free funds stream: € .five billion to € .6 billion (versus c. € .seven billion pre Covid-19)[*].

The Team suspends its targets for 2021, the final yr of the three-yr prepare introduced at the Trader Day held on January 30, 2019. The Team will present its vision as nicely as its mid-term targets at the 2020 Analyst Day (day to be rescheduled).

Postponement of Annual Typical Meeting and extraordinary cancellation of dividend payment in 2020

Owing to the extraordinary situations connected to the Covid-19, the Board of Directors, which achieved on March 31, 2020, has made a decision to postpone the Annual Typical Meeting at first scheduled on Could fourteen, 2020 to June 26, 2020.

In these unprecedented situations, through its session on April 21, 2020, the Board of Directors took the extraordinary decision not to propose the 1.40 euro per share dividend which was at first thought of to be submitted to the Annual Typical Meeting. In addition, the Chief Govt Officer as nicely as other customers of the Typical Administration Committee have made a decision to minimize by 30% their payment through the recent three-thirty day period period from March to Could 2020. The Chairman of Atos’ Board of Directors has manufactured the very same decision.

The Team confirms that the cancellation of the dividend this yr is an exception to its dividend coverage with a shell out-out ratio in between 25% and 30% of Web earnings Team share.

Appendix

Income at frequent scope and trade fees reconciliation

In € million Q1 2020 Q1 2019 % change
Statutory earnings 2,834 2,818 +.6%
Trade fees impact 26  
 
Income at frequent trade fees 2,834 2,843 -.3%
   
Scope impact fourteen  
Trade fees impact on obtained/disposed perimeters 1  
Income at frequent scope and trade fees 2,834 2,858 -.eight%
       

Scope effects amounted to €+fourteen million for earnings and are primarily related to the acquisition of Maven Wave, consolidated as of February 1, 2020 (2 months for €+eighteen 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 €+2 million), the disposal of some distinct Unified Communication & Collaboration routines typically in Q1 2020 (complete restatement of €-four million) as nicely as former ITO routines in the United kingdom beginning of H2 2019 (3 months for €-four million), and finally the disposal and decommissioning of non-strategic routines inside CVC.

Currency trade fees effects typically arrived from the American greenback as nicely as the British pound and positively contributed to earnings for €+26 million.

Convention call

Nowadays, Wednesday, April 22, 2020, the Team will maintain a meeting call in English at 08:00 am (CET – Paris), chaired by Elie Girard, CEO, in purchase to remark on Atos’ Q1 2020 earnings and respond to questions from the economical local community.

You can be part of the webcast of the meeting:

  • on web, in the Buyers segment
  • by smartphones or tablets through the scan of:
  • by telephone with the dial-in, five-ten minutes prior the commencing time:
    • France             +33 1 70 70 07 81       code 12652364
    • Germany             +49 69 2222 2625       code 12652364
    • United kingdom             +44 844 481 9752       code 12652364
    • US             +1 646 741 3167         code 12652364
    • Other international locations +44 2071 928338        code 12652364

Just after the meeting, a replay of the webcast will be out there on atos.web, in the Buyers segment.

Forthcoming activities

June 26, 2020              Annual Typical Meeting

July 27, 2020               1st fifty percent 2020 benefits

Oct 22, 2020         3rd quarter 2020 earnings

To be scheduled            2020 Analyst Day