First quarter of 2020 – Atos

A resilient profile and a powerful equilibrium sheet to experience an unprecedented scenario

Earnings at € two,834 million

-.8% natural and organic expansion

Reserve to bill ratio at 103%

Renewals of big contracts in North America

Acceptable organization mix to aid prospects in Covid-19 context

Essential price steps currently being executed to safeguard operating margin

SPRING transformation application to an Marketplace method effectively on observe

Update of 2020 objectives article Covid-19

 

Paris, April 22, 2020,

Atos, a world wide leader in digital transformation, these days announces the profits of its initially quarter of 2020.

Elie Girard, CEO, mentioned: “In this unprecedented atmosphere wherever uncertainty prevails, our initially precedence has been to safeguard our workers while supplying complete continuity of provider to our purchasers. The Group is solidly positioned to navigate smoothly as a result of the crisis thanks to deep customer relationships across all industries, a resilient organization mix and a robust equilibrium sheet that offers a powerful money flexibility.

Our one hundred ten,000 colleagues across the planet have presented an fast and exceptional response to customers’ problems and have to have for aid as a result of our “Always Ready” application made presently considering the fact that the commencing of the calendar year. Now our minds and efforts are turning to the article-Covid periods, actively planning for the “new normal” which will see an acceleration in unique customers’ demands, particularly details platforms, cybersecurity, cloud migration, digital place of work and decarbonization.

We revise these days our objectives for 2020 demonstrating the resilience of the Group and the willingness to share any effects rather across stakeholders. I am persuaded that Atos will arise from this world wide crisis stronger than at any time and prepared to move ahead to the upcoming stage.”

Q1 2020 revenue was € 2,834 million, down -.8% organically. In the context of Covid-19 crisis and restrictions and lockdowns in March in most of the nations wherever the Group operates, profits decreased only somewhat thanks to the resilient profile of its firms primarily based on multi-calendar year contracts mixed with its solid organization in Significant Knowledge and Cybersecurity. Moreover, and in spite of the crisis, the Group accelerated its business dynamism with buy entry at € 2,908 million top to a ebook to bill ratio of 103%, noticeably up in contrast to previous calendar year at 86%.

Q1 2020 profits performance by Marketplace

In € million	Q1 2020	Q1 2019*	Natural and organic evolution
Production	539	555	-two.9%
Fiscal Providers & Coverage	527	542	-two.six%
Community Sector & Protection	584	566	+3.two%
Telecom, Media & Technological innovation	443	439	+.8%
Assets & Providers	418	416	+.4%
Health care & Existence Sciences	323	340	-4.9%
Whole Group	two,834	two,858	-.8%
* At regular scope and exchange fees

 

Production reached € 539 million of profits, down -two.9% at regular scope and exchange fees. The Marketplace benefitted from a superior performance in Automotive with the ramp-up of a German vehicle firm and Rheinmetall on details administration contracts, compensating the effects in Daimler thanks to Covid-19 and the ramp down of PSA. Conversely, Production was impacted by lower volumes with Siemens, a slowdown in the Aerospace sector thanks to Covid-19, and many shifts of devices sales to the close of the quarter.

Fiscal Providers & Coverage profits was € 527 million in the initially 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 effectively as the growth of exercise with a payment firm in France which have additional than compensated for the reduction of volumes from banking establishments in Central Europe. Escalating marketplaces suffered from non-repeated sales done previous calendar year in APAC and Center East & Africa. In North America, challenge primarily based pursuits reduce presently noticed in earlier quarters was accelerated in March thanks to decisions from many Fiscal Providers corporations to postpone or reduce discretionary costs in the context of Covid-19.

Community Sector & Protection profits was € 584 million, up +3.two% at regular scope and exchange fees. The expansion was pushed by the powerful performance recorded in Northern Europe, thanks to the continuation of the deal with European Center for Medium vary Climate forecast as effectively as with EU Lisa and smart details system in Benelux. North America reached steadiness regardless of lower volumes, thanks to further sales on present contracts. The scenario was additional tough in Southern Europe, impacted by the ramp-down of Significant Efficiency Computing exercise as effectively as non-repeated sales done previous calendar year. Central Europe was negatively impacted by lower volumes, and at last Escalating Markets was impacted by profits recorded previous calendar year for the Tokyo Olympic Online games planning and not repeated this calendar year.

Telecom, Media & Technological innovation reached € 443 million, up +.8% organically, with a contrasted performance by geography and by exercise. Significant Tech & Technological innovation posted a powerful expansion, pushed by Unified Communication & Collaboration choices in Central Europe, sustained by natural and organic expansion of recently obtained firm Maven Wave in North America and deal ramp-up with a large lover, as effectively as further sales in Southern Europe. Media amplified as effectively, benefitting from new organization growth, coupled with larger volumes with present prospects in North America. Telecom exercise was primarily impacted by some ramp-downs in Southern Europe.

Earnings in Assets & Providers reached € 418 million and amplified by +.4% organically. Business enterprise in Electrical power & Utilities sector fueled the expansion. In individual, the Marketplace sent a Significant Efficiency Computer system in South America. Electronic place of work expert services ramped-up with a big Electrical power supplier in North America and with National Grid in Northern Europe. The scenario in Retail, Transportation & Hospitality sectors was additional tough in the context of Covid-19. In truth, while the ramp-up of a new IoT deal signed in the place of predictive maintenance benefitted to North America, the Marketplace confronted quantity reductions in Europe.

Health care & Existence Sciences profits was € 323 million, down by -4.9% in contrast to Q1 2019, impacted by quantity reductions on really unique contracts in equally North America and Northern Europe, while the marketplace benefitted from the ramp-up of a world wide deal with Bayer and a digital place of work deal signed previous calendar year in Central Europe, and the ramp-up of an Australian Community Company deal in Escalating Markets. Southern Europe benefitted from a powerful exercise in digital assignments and Significant Efficiency Computing.

 

Q1 2020 profits performance by Regional Business enterprise Device

 

In € million	Q1 2020	Q1 2019*	Natural and organic evolution
North America	681	699	-two.six%
Northern Europe	698	696	+.3%
Southern Europe	594	609	-two.six%
Central Europe	667	660	+one.%
Escalating Markets	194	192	+one.%
Whole Group	two,834	two,858	-.8%
* At regular scope and exchange fees

The initially quarter of 2020 confirmed distinctive profits evolution by Regional Business enterprise Units which can be summarized as follows:

• In North America, profits reached € 681 million, reducing by -two.six% organically primarily coming from Covid-19 induced challenge stops and quantity reductions in many Industries. The Business enterprise Device reached expansion in Telecom, Media & Technological innovation and Assets & Providers thanks to new brand, larger volumes and ramp up of present contracts
• In Northern Europe, profits was around secure at € 698 million. Robust organization was recorded in Community Sector & Protection primarily led by the continuation of the HPC deal with European Centre for Medium Variety Climate Forecast, as effectively as by deliveries to European Union Establishments. Telecom, Media & Technological innovation and Manufacturing confronted some contracts ending and Health care & Existence Sciences a reduction on Business enterprise Method Outsourcing contracts
• In Southern Europe, profits reached € 594 million, reducing by -two.six% Health care & Existence Sciences posted a double-digit expansion thanks to digital assignments sent and Significant Efficiency Computing pursuits. The geography was impacted by non-repeated sales also on Significant Efficiency Computing pursuits done previous calendar year in many Industries
• In Central Europe, the geography amplified organically by +one.% top to a € 667 million Production benefitted from many ramp-up of infrastructure contracts and further assignments. Earnings in Telecom, Media & Technological innovation also amplified, pushed by Unified Communication & Collaboration organization. Health care & Existence Sciences posted a double-digit expansion primarily fueled by new contracts. Community Sector & Protection was impacted by non-repeated sales and assignments reached previous calendar year while new assignments in SAP HANA and in Electronic had been done in Germany and in Austria. Last but not least, Assets & Providers was impacted by a lower need in Unify Communication channels
• Escalating Markets reached € 194 million profits, +one.% Production posted a solid expansion, pushed by a larger degree of sales as effectively as stronger need in digital assignments primarily in Asia-Pacific and South America. Earnings in Useful resource & Providers strongly amplified fueled by Significant Efficiency Computing exercise in South America while the scenario was additional tough in Fiscal Providers primarily in Asia Pacific.

Q1 2020 profits performance by Division

 

In € million	Q1 2020	Q1 2019*	Natural and organic evolution
Infrastructure & Knowledge Administration	one,558	one,566	-.five%
Business enterprise & System Options	one,016	one,069	-4.9%
Significant Knowledge & Cybersecurity	259	223	+sixteen.3%
Whole Group	two,834	two,858	-.8%
* At regular scope and exchange fees

In Infrastructure & Knowledge Administration (IDM), profits was € 1,558 million, -.five% organically. The Division ongoing to roll-out its transformation model by extending Hybrid Cloud Orchestration as effectively as escalating Electronic Office implementation.

The unique scenario thanks to Covid-19 pandemic necessary a solid organization continuity for vital infrastructures for its prospects. In truth, the Division recorded a powerful need on Electronic Office remedies (accessing apps from anyplace), business interaction choices with Unified Collaboration & Communication, network connections, and many others. These pursuits are joined to the remote doing the job that has been place in area by a whole lot of corporations to experience the lockdown and keep their exercise.

Last but not least, in the recent context, the Division recorded significantly less profits produced by devices sales and fertilization in present contracts in March.

In Business enterprise & System Options (B&PS) profits was € 1,016 million, -4.9% organically. As a reminder, the Division was down -one.two% in This autumn 2019 thanks to the headwinds in Fiscal Providers in North America as effectively as in Automotive marketplace in Germany, and consequently did not hope any enhancement in the commencing of 2020 even just before Covid-19.

In the new context of Covid-19, the Division experienced to experience a slowdown in most of the Industries. In truth, this organization phase is considerably additional dependent from the cycle and prospects started out in March to postpone discretionary assignments. The Group considers that the most impacted pursuits will be Technological innovation Skilled Providers necessitating engineers doing the job on buyer web pages, that are unable to be done on a remote method (circa 30% of Business enterprise & System Options profits). On the reverse, Software Growth and Upkeep, primarily based on prolonged time period contracts should really be resilient (circa 40% of Business enterprise & System Options profits). In concerning, a large section of vital Electronic Assignments (circa 30% of Business enterprise & System Options profits) can be done on a remote method, but the quantity of the organization will count in the upcoming months from the buyer requires on new assignments.

The organization in Significant Knowledge & Cybersecurity (BDS) remained powerful with profits up +sixteen.3% organically at € 259 million in the initially quarter of 2020. In the recent context, the remote doing the job as effectively as the improve of cyberattacks led corporations to reinforce the safety of their infrastructure and details. As illustrations, prospects requested for additional remedies of identification in fast method, and consulting on the solidity of their safety infrastructure.

In Significant Knowledge, there was no discontinuity in the source chain thanks to pro-lively inventory administration. The need remains powerful in Significant Efficiency Computing. As an instance, remote access to SAP HANA necessitates further processing electricity and consequently greater demands of Sequana S in-memory servers. Last but not least, Mission Critical Procedure organization also recorded a substantial profits expansion.

Industrial exercise

Throughout the initially quarter of 2020, the Group buy entry reached € 2,908 million representing a Reserve to Monthly bill ratio of 103%, in contrast to 86% reached around the similar interval previous calendar year.

The main new contracts signed around the interval had been notably in North America with a large American firm in Protection Sector (Telecom, Media & Technological innovation), in Central Europe with Norddeutsche Landesbank (Fiscal Providers & Coverage) and a world wide european pharmaceutical firm (Health & Existence Sciences) and in Southern Europe with a big utility in France and with Ile-de-France Mobilités (Assets & Providers), as effectively as with a French banking establishment (Fiscal Providers & Coverage).

Deal renewals of the quarter provided large signatures with notably the initially section of the renewal of Texas Office of Information Assets deal (Community Sector & Protection), the renewal of Conduent deal (Telecom, Media & Technological innovation) in North America, a deal with a Worldwide European business in money items for SAP HANA (Production) in Central Europe, as effectively as with the French UGAP (Community Sector & Protection) in Southern Europe.

In line with this dynamic business exercise, the complete backlog amounted to € 22.one billion at the close of March 2020, representing one.9 calendar year of profits. The complete skilled pipeline reached € 7.six billion, representing 7.8 months of profits.

Human methods

The total headcount was 108,602 at the close of March 2020, broadly secure in contrast to 108,317 at the close of December 2019.

In the initially quarter of 2020, the Group employed five,043 staff members, primarily in offshore nations.

How Atos handles Covid-19 effects

Since close of January, the Group administration, supported by Group Human Assets, has been concentrating on the overall health and security of workers while making certain a appropriate implementation of pre-described organization continuity strategies in every Division.

The Group also activated the “Always Ready” application, pulling alongside one another all Group remedies especially adapted to this distressed scenario and currently being proactively presented to prospects to support them go as a result of the crisis: aid to generalized homeworking which includes collaboration characteristics, unique aid to community & overall health establishments, reinforcement of cybersecurity protections, and many others. Customers’ suggestions and gratification with regards to Atos teams reactivity has been overwhelmingly positive. Atos is also concerned into lots of governmental assignments across the planet to fight in opposition to the virus, and put together the progressive reduction of restrictions and lockdowns.

To safeguard its operating margin, the Group has taken powerful steps on its price foundation in the subsequent parts:

• Robust centralized monitoring of staff fees (choosing freeze, cancellation of wage increases, effects on variable compensation, vacations, and many others.)
• Replacement of subcontractors by own freed up staff members
• Cancellation of non buyer linked discretionary costs
• Robust saving application on non staff fees.

In total, the Group introduced a application representing a total total of c. four hundred million euros of cost savings in 2020.

Current 2020 objectives article Covid-19

As the 2020 objectives disclosed on February 19, 2020 had been pre Covid-19 result, the Group updates these days its a few objectives for the complete calendar year 2020, primarily based on the recent macroeconomic state of affairs of a progressive recovery around H2 2020 and 2021, as effectively as the management’s daily discussions with Group prospects:

• Earnings natural and organic evolution: concerning -two% and -4% (compared to c. +two% pre Covid-19)
• Functioning margin level: 9% to 9.five% of profits (compared to +twenty bps to + 40 bps above 2019 (10.3% noted) pre Covid-19)
• Cost-free funds circulation: € .five billion to € .six billion (compared to c. € .7 billion pre Covid-19)[*].

The Group suspends its targets for 2021, the previous calendar year of the a few-calendar year plan introduced at the Investor Working day held on January 30, 2019. The Group will current its eyesight as effectively as its mid-time period targets at the 2020 Analyst Working day (day to be rescheduled).

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

Thanks to the exceptional situations joined to the Covid-19, the Board of Administrators, which met on March 31, 2020, has determined to postpone the Yearly Common Conference in the beginning scheduled on May perhaps 14, 2020 to June 26, 2020.

In these unprecedented situations, through its session on April 21, 2020, the Board of Administrators took the exceptional choice not to suggest the one.40 euro for every share dividend which was in the beginning thought of to be submitted to the Yearly Common Conference. In addition, the Main Govt Officer as effectively as other users of the Common Administration Committee have determined to reduce by 30% their compensation through the recent a few-thirty day period interval from March to May perhaps 2020. The Chairman of Atos’ Board of Administrators has produced the similar choice.

The Group confirms that the cancellation of the dividend this calendar year is an exception to its dividend policy with a spend-out ratio concerning 25% and 30% of Web revenue Group share.

 

Appendix

Earnings at regular scope and exchange fees reconciliation

In € million	Q1 2020	Q1 2019	% improve
Statutory profits	two,834	two,818	+.six%
Exchange fees result		26
Earnings at regular exchange fees	two,834	two,843	-.3%
Scope result		14
Exchange fees result on obtained/disposed perimeters		one
Earnings at regular scope and exchange fees	two,834	two,858	-.8%

Scope results amounted to €+14 million for profits and are primarily linked to the acquisition of Maven Wave, consolidated as of February one, 2020 (two months for €+18 million), the acquisition of IDnomic, consolidated as of Oct one, 2019 (3 months for €+4 million), the acquisition of X-PERION, consolidated as of December one, 2019 (3 months for €+two million), the disposal of some unique Unified Communication & Collaboration pursuits typically in Q1 2020 (total restatement of €-4 million) as effectively as former ITO pursuits in the British isles commencing of H2 2019 (3 months for €-4 million), and at last the disposal and decommissioning of non-strategic pursuits in CVC.

Currency exchange fees results typically came from the American greenback as effectively as the British pound and positively contributed to profits for €+26 million.

 

Convention call

Currently, Wednesday, April 22, 2020, the Group will keep a convention call in English at 08:00 am (CET – Paris), chaired by Elie Girard, CEO, in buy to remark on Atos’ Q1 2020 profits and response queries from the money community.

You can sign up for the webcast of the convention:

• on net, in the Investors part
• by smartphones or tablets as a result of the scan of:
• by phone with the dial-in, five-10 minutes prior the starting up time:
  • France             +33 one 70 70 07 81       code 12652364
  • Germany             +49 69 2222 2625       code 12652364
  • British isles             +44 844 481 9752       code 12652364
  • US             +one 646 741 3167         code 12652364
  • Other nations +44 2071 928338        code 12652364

After the convention, a replay of the webcast will be out there on atos.net, in the Investors part.

 

Forthcoming events

June 26, 2020              Yearly Common Conference

July 27, 2020               Initially fifty percent 2020 effects

Oct 22, 2020         Third quarter 2020 profits

To be scheduled            2020 Analyst Working day