First quarter of 2020 – Atos

A resilient profile and a strong stability sheet to deal with an unprecedented circumstance

Revenue at € 2,834 million

-.8% organic growth

Reserve to monthly bill ratio at 103%

Renewals of main contracts in North America

Correct small business combine to help shoppers in Covid-19 context

Necessary expense actions remaining executed to shield running margin

SPRING transformation system to an Marketplace strategy properly on keep track of

Update of 2020 aims post Covid-19

 

Paris, April 22, 2020,

Atos, a international leader in electronic transformation, currently announces the profits of its 1st quarter of 2020.

Elie Girard, CEO, stated: “In this unprecedented ecosystem where uncertainty prevails, our 1st precedence has been to shield our personnel when featuring complete continuity of provider to our clientele. The Group is solidly positioned to navigate efficiently via the disaster thanks to deep customer relationships throughout all industries, a resilient small business combine and a strong stability sheet that offers a strong economic adaptability.

Our one hundred ten,000 colleagues throughout the globe have provided an fast and remarkable response to customers’ issues and require for help via our “Always Ready” system designed previously due to the fact the starting of the 12 months. Now our minds and efforts are turning to the post-Covid situations, actively planning for the “new normal” which will see an acceleration in specific customers’ needs, specifically info platforms, cybersecurity, cloud migration, electronic workplace and decarbonization.

We revise currently our aims for 2020 demonstrating the resilience of the Group and the willingness to share any effects rather throughout stakeholders. I am confident that Atos will emerge from this international disaster more robust than at any time and all set to move ahead to the next step.”

Q1 2020 revenue was € 2,834 million, down -.8% organically. In the context of Covid-19 disaster and restrictions and lockdowns in March in most of the nations around the world where the Group operates, profits reduced only a bit thanks to the resilient profile of its businesses based mostly on multi-12 months contracts mixed with its good small business in Significant Details and Cybersecurity. What’s more, and in spite of the disaster, the Group accelerated its industrial dynamism with buy entry at € 2,908 million main to a e book to monthly bill ratio of 103%, substantially up when compared to past 12 months at 86%.

Q1 2020 profits effectiveness by Marketplace

In € million	Q1 2020	Q1 2019*	Natural evolution
Manufacturing	539	555	-2.nine%
Economical Products and services & Insurance	527	542	-2.six%
Community Sector & Defense	584	566	+3.2%
Telecom, Media & Technologies	443	439	+.8%
Means & Products and services	418	416	+.four%
Healthcare & Everyday living Sciences	323	340	-four.nine%
Total Group	2,834	2,858	-.8%
* At consistent scope and exchange prices

 

Manufacturing attained € 539 million of profits, down -2.nine% at consistent scope and exchange prices. The Marketplace benefitted from a fantastic effectiveness in Automotive with the ramp-up of a German car or truck enterprise and Rheinmetall on info administration contracts, compensating the effects in Daimler thanks to Covid-19 and the ramp down of PSA. Conversely, Manufacturing was impacted by decrease volumes with Siemens, a slowdown in the Aerospace sector thanks to Covid-19, and numerous shifts of machines product sales toward the conclusion of the quarter.

Economical Products and services & Insurance profits was € 527 million in the 1st 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 properly as the progress of exercise with a payment enterprise in France which have extra than compensated for the reduction of volumes from banking institutions in Central Europe. Growing markets experienced from non-repeated product sales done past 12 months in APAC and Middle East & Africa. In North America, venture based mostly activities minimize previously noticed in previous quarters was accelerated in March thanks to conclusions from numerous Economical Products and services companies to postpone or minimize discretionary charges in the context of Covid-19.

Community Sector & Defense profits was € 584 million, up +3.2% at consistent scope and exchange prices. The growth was driven by the strong effectiveness recorded in Northern Europe, thanks to the continuation of the contract with European Middle for Medium array Climate forecast as properly as with EU Lisa and smart info system in Benelux. North America attained balance regardless of decrease volumes, thanks to added product sales on current contracts. The circumstance was extra tough in Southern Europe, impacted by the ramp-down of Higher Effectiveness Computing exercise as properly as non-repeated product sales done past 12 months. Central Europe was negatively impacted by decrease volumes, and lastly Growing Markets was impacted by profits recorded past 12 months for the Tokyo Olympic Video games planning and not repeated this 12 months.

Telecom, Media & Technologies attained € 443 million, up +.8% organically, with a contrasted effectiveness by geography and by exercise. Higher Tech & Technologies posted a strong growth, driven by Unified Communication & Collaboration offerings in Central Europe, sustained by organic growth of newly acquired enterprise Maven Wave in North America and contract ramp-up with a large husband or wife, as properly as added product sales in Southern Europe. Media increased as properly, benefitting from new small business progress, coupled with greater volumes with current shoppers in North Am
erica. Telecom exercise was largely impacted by some ramp-downs in Southern Europe.

Revenue in Means & Products and services attained € 418 million and increased by +.four% organically. Small business in Power & Utilities sector fueled the growth. In particular, the Marketplace shipped a Higher Effectiveness Personal computer in South America. Electronic workplace services ramped-up with a main Power provider in North America and with Nationwide Grid in Northern Europe. The circumstance in Retail, Transportation & Hospitality sectors was extra tough in the context of Covid-19. In fact, when the ramp-up of a new IoT contract signed in the location of predictive upkeep benefitted to North America, the Marketplace confronted volume reductions in Europe.

Healthcare & Everyday living Sciences profits was € 323 million, down by -four.nine% when compared to Q1 2019, impacted by volume reductions on really specific contracts in equally North America and Northern Europe, when the marketplace benefitted from the ramp-up of a international contract with Bayer and a electronic workplace contract signed past 12 months in Central Europe, and the ramp-up of an Australian Community Agency contract in Growing Markets. Southern Europe benefitted from a strong exercise in electronic projects and Higher Effectiveness Computing.

 

Q1 2020 profits effectiveness by Regional Small business Device

 

In € million	Q1 2020	Q1 2019*	Natural evolution
North America	681	699	-2.six%
Northern Europe	698	696	+.3%
Southern Europe	594	609	-2.six%
Central Europe	667	660	+1.%
Growing Markets	194	192	+1.%
Total Group	2,834	2,858	-.8%
* At consistent scope and exchange prices

The 1st quarter of 2020 confirmed distinct profits evolution by Regional Small business Units which can be summarized as follows:

• In North America, profits attained € 681 million, decreasing by -2.six% organically largely coming from Covid-19 triggered venture stops and volume reductions in numerous Industries. The Small business Device attained growth in Telecom, Media & Technologies and Means & Products and services thanks to new brand, greater volumes and ramp up of current contracts
• In Northern Europe, profits was roughly steady at € 698 million. Potent small business was recorded in Community Sector & Defense largely led by the continuation of the HPC contract with European Centre for Medium Assortment Climate Forecast, as properly as by deliveries to European Union Institutions. Telecom, Media & Technologies and Manufacturing confronted some contracts ending and Healthcare & Everyday living Sciences a reduction on Small business Approach Outsourcing contracts
• In Southern Europe, profits attained € 594 million, decreasing by -2.six% Healthcare & Everyday living Sciences posted a double-digit growth thanks to electronic projects shipped and Higher Effectiveness Computing activities. The geography was impacted by non-repeated product sales also on Higher Effectiveness Computing activities done past 12 months in numerous Industries
• In Central Europe, the geography increased organically by +1.% main to a € 667 million Manufacturing benefitted from numerous ramp-up of infrastructure contracts and added projects. Revenue in Telecom, Media & Technologies also increased, driven by Unified Communication & Collaboration small business. Healthcare & Everyday living Sciences posted a double-digit growth largely fueled by new contracts. Community Sector & Defense was impacted by non-repeated product sales and projects attained past 12 months when new projects in SAP HANA and in Electronic were done in Germany and in Austria. Last but not least, Means & Products and services was impacted by a decrease demand from customers in Unify Communication channels
• Growing Markets attained € 194 million profits, +1.% Manufacturing posted a good growth, pushed by a greater degree of product sales as properly as more robust demand from customers in electronic projects largely in Asia-Pacific and South America. Revenue in Resource & Products and services strongly increased fueled by Higher Effectiveness Computing exercise in South America when the circumstance was extra tough in Economical Products and services largely in Asia Pacific.

Q1 2020 profits effectiveness by Division

 

In € million	Q1 2020	Q1 2019*	Natural evolution
Infrastructure & Details Administration	1,558	1,566	-.5%
Small business & Platform Alternatives	1,016	1,069	-four.nine%
Significant Details & Cybersecurity	259	223	+16.3%
Total Group	2,834	2,858	-.8%
* At consistent scope and exchange prices

In Infrastructure & Details Administration (IDM), profits was € 1,558 million, -.5% organically. The Division ongoing to roll-out its transformation design by extending Hybrid Cloud Orchestration as properly as raising Electronic Place of work implementation.

The specific circumstance thanks to Covid-19 pandemic necessary a good small business continuity for essential infrastructures for its shoppers. In fact, the Division recorded a strong demand from customers on Electronic Place of work alternatives (accessing apps from any place), business communication offerings with Unified Collaboration & Communication, community connections, etcetera. These activities are joined to the distant performing that has been place in position by a ton of corporations to deal with the lockdown and manage their exercise.

Last but not least, in the current context, the Division recorded a lot less profits created by machines product sales and fertilization in current contracts in March
.

In Small business & Platform Alternatives (B&PS) profits was € 1,016 million, -four.nine% organically. As a reminder, the Division was down -1.2% in This autumn 2019 thanks to the headwinds in Economical Products and services in North America as properly as in Automotive marketplace in Germany, and as a result did not count on any improvement in the starting of 2020 even ahead of Covid-19.

In the new context of Covid-19, the Division had to deal with a slowdown in most of the Industries. In fact, this small business section is substantially extra dependent from the cycle and shoppers commenced in March to postpone discretionary projects. The Group considers that the most impacted activities will be Technologies Expert Products and services demanding engineers performing on purchaser sites, that simply cannot be done on a distant method (circa thirty% of Small business & Platform Alternatives profits). On the reverse, Software Advancement and Upkeep, based mostly on prolonged time period contracts should be resilient (circa forty% of Small business & Platform Alternatives profits). In concerning, a large part of essential Electronic Assignments (circa thirty% of Small business & Platform Alternatives profits) can be done on a distant method, but the volume of the small business will count in the next months from the purchaser calls for on new projects.

The small business in Significant Details & Cybersecurity (BDS) remained strong with profits up +16.3% organically at € 259 million in the 1st quarter of 2020. In the current context, the distant performing as properly as the boost of cyberattacks led corporations to fortify the security of their infrastructure and info. As illustrations, shoppers questioned for extra alternatives of identification in speedy method, and consulting on the solidity of their security infrastructure.

In Significant Details, there was no discontinuity in the source chain thanks to professional-energetic stock administration. The demand from customers stays strong in Higher Effectiveness Computing. As an instance, distant entry to SAP HANA requires added processing electrical power and as a result greater needs of Sequana S in-memory servers. Last but not least, Mission Critical Method small business also recorded a higher profits growth.

Industrial exercise

All through the 1st quarter of 2020, the Group buy entry attained € 2,908 million representing a Reserve to Invoice ratio of 103%, when compared to 86% attained more than the same period of time past 12 months.

The major new contracts signed more than the period of time were notably in North America with a large American enterprise in Defense Sector (Telecom, Media & Technologies), in Central Europe with Norddeutsche Landesbank (Economical Products and services & Insurance) and a international european pharmaceutical enterprise (Overall health & Everyday living Sciences) and in Southern Europe with a main utility in France and with Ile-de-France Mobilités (Means & Products and services), as properly as with a French banking institution (Economical Products and services & Insurance).

Contract renewals of the quarter included large signatures with notably the 1st part of the renewal of Texas Section of Information and facts Means contract (Community Sector & Defense), the renewal of Conduent contract (Telecom, Media & Technologies) in North America, a contract with a World-wide European business in funds products for SAP HANA (Manufacturing) in Central Europe, as properly as with the French UGAP (Community Sector & Defense) in Southern Europe.

In line with this dynamic industrial exercise, the complete backlog amounted to € 22.1 billion at the conclusion of March 2020, representing 1.nine 12 months of profits. The complete skilled pipeline attained € seven.six billion, representing seven.8 months of profits.

Human methods

The full headcount was 108,602 at the conclusion of March 2020, broadly steady when compared to 108,317 at the conclusion of December 2019.

In the 1st quarter of 2020, the Group hired 5,043 staff, largely in offshore nations around the world.

How Atos handles Covid-19 effects

Considering that conclusion of January, the Group administration, supported by Group Human Means, has been focusing on the wellbeing and security of personnel when making sure a good implementation of pre-defined small business continuity plans in each Division.

The Group also activated the “Always Ready” system, pulling collectively all Group alternatives particularly adapted to this distressed circumstance and remaining proactively made available to shoppers to assistance them go via the disaster: help to generalized homeworking like collaboration options, specific help to public & wellbeing institutions, reinforcement of cybersecurity protections, etcetera. Customers’ feed-back and satisfaction with regards to Atos groups reactivity has been overwhelmingly beneficial. Atos is also associated into several governmental projects throughout the globe to struggle versus the virus, and prepare the progressive reduction of restrictions and lockdowns.

To shield its running margin, the Group has taken strong actions on its expense foundation in the subsequent parts:

• Potent centralized checking of personnel prices (choosing freeze, cancellation of salary will increase, effects on variable payment, vacations, etcetera.)
• Substitution of subcontractors by individual freed up staff
• Cancellation of non purchaser linked discretionary charges
• Potent preserving system on non personnel prices.

In full, the Group introduced a system representing a full sum of c. 400 million euros of price savings in 2020.

Current 2020 aims post Covid-19

As the 2020 aims disclosed on February 19, 2020 were pre Covid-19 impact, the Group updates currently its 3 aims for the complete 12 months 2020, based mostly on the current macroeconomic state of affairs of a progressive restoration more than H2 2020 and 2021, as properly as the management’s daily conversations with Group shoppers:

• Revenue organic evolution: concerning -2% and -four% (versus c. +2% pre Covid-19)
• Working margin charge: nine% to nine.5% of profits (versus +twenty bps to + forty bps previously mentioned 2019 (10.3% reported) pre Covid-19)
• Cost-free money circulation: € .5 billion to € .six billion (versus c. € .seven billion pre Covid-19)[*].

The Group suspends its targets for 2021, the past 12 months of the 3-12 months program offered at the Trader Working day held on January thirty, 2019. The Group will current its vision as properly as its mid-time period targets at the 2020 Analyst Working day (day to be rescheduled).

Postponement of Annual Normal Meeting and outstanding cancellation of dividend payment in 2020

Thanks to the outstanding circumstances joined to the Covid-19, the Board of Directors, which fulfilled on March 31, 2020, has resolved to po
stpone the Annual Normal Meeting at first scheduled on May well 14, 2020 to June 26, 2020.

In these unprecedented circumstances, all through its session on April 21, 2020, the Board of Directors took the outstanding final decision not to suggest the 1.forty euro for each share dividend which was at first thought of to be submitted to the Annual Normal Meeting. In addition, the Chief Govt Officer as properly as other members of the Normal Administration Committee have resolved to minimize by thirty% their payment all through the current 3-month period of time from March to May well 2020. The Chairman of Atos’ Board of Directors has designed the same final decision.

The Group confirms that the cancellation of the dividend this 12 months is an exception to its dividend coverage with a fork out-out ratio concerning twenty five% and thirty% of Net money Group share.

 

Appendix

Revenue at consistent scope and exchange prices reconciliation

In € million	Q1 2020	Q1 2019	% transform
Statutory profits	2,834	2,818	+.six%
Trade prices impact		26
Revenue at consistent exchange prices	2,834	2,843	-.3%
Scope impact		14
Trade prices impact on acquired/disposed perimeters		1
Revenue at consistent scope and exchange prices	2,834	2,858	-.8%

Scope effects amounted to €+14 million for profits and are largely linked 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 specific Unified Communication & Collaboration activities typically in Q1 2020 (full restatement of €-four million) as properly as previous ITO activities in the Uk starting of H2 2019 (3 months for €-four million), and lastly the disposal and decommissioning of non-strategic activities in CVC.

Forex exchange prices effects typically came from the American dollar as properly as the British pound and positively contributed to profits for €+26 million.

 

Convention get in touch with

Today, Wednesday, April 22, 2020, the Group will hold a conference get in touch with in English at 08:00 am (CET – Paris), chaired by Elie Girard, CEO, in buy to remark on Atos’ Q1 2020 profits and answer inquiries from the economic local community.

You can join the webcast of the conference:

• on net, in the Investors portion
• by smartphones or tablets via the scan of:
• by telephone with the dial-in, 5-10 minutes prior the setting up time:
  • France             +33 1 70 70 07 81       code 12652364
  • Germany             +forty nine sixty nine 2222 2625       code 12652364
  • Uk             +44 844 481 9752       code 12652364
  • US             +1 646 741 3167         code 12652364
  • Other nations around the world +44 2071 928338        code 12652364

Right after the conference, a replay of the webcast will be available on atos.net, in the Investors portion.

 

Forthcoming gatherings

June 26, 2020              Annual Normal Meeting

July 27, 2020               Initially 50 percent 2020 final results

Oct 22, 2020         Third quarter 2020 profits

To be scheduled            2020 Analyst Working day