First quarter of 2020 – Atos

A resilient profile and a powerful harmony sheet to facial area an unprecedented problem

Income at € two,834 million

-.8% organic and natural development

E book to invoice ratio at 103%

Renewals of key contracts in North The united states

Suitable small business combine to assist shoppers in Covid-19 context

Essential expense actions getting implemented to defend operating margin

SPRING transformation program to an Market technique very well on observe

Update of 2020 targets submit Covid-19

 

Paris, April 22, 2020,

Atos, a global chief in digital transformation, nowadays announces the earnings of its first quarter of 2020.

Elie Girard, CEO, mentioned: “In this unprecedented atmosphere where by uncertainty prevails, our first precedence has been to defend our staff though giving entire continuity of support to our clients. The Team is solidly positioned to navigate easily through the disaster thanks to deep client relationships across all industries, a resilient small business combine and a sturdy harmony sheet that delivers a powerful monetary overall flexibility.

Our a hundred and ten,000 colleagues across the planet have furnished an instant and exceptional response to customers’ worries and require for assist through our “Always Ready” program designed presently given that the beginning of the 12 months. Now our minds and efforts are turning to the submit-Covid instances, actively planning for the “new normal” which will see an acceleration in distinct customers’ desires, specifically knowledge platforms, cybersecurity, cloud migration, digital place of work and decarbonization.

We revise nowadays our targets for 2020 demonstrating the resilience of the Team and the willingness to share any effects rather across stakeholders. I am convinced that Atos will arise from this global disaster much better than ever and ready to shift forward to the following move.”

Q1 2020 revenue was € 2,834 million, down -.8% organically. In the context of Covid-19 disaster and constraints and lockdowns in March in most of the countries where by the Team operates, earnings decreased only a little thanks to the resilient profile of its enterprises centered on multi-12 months contracts combined with its strong small business in Massive Data and Cybersecurity. In addition, and in spite of the disaster, the Team accelerated its industrial dynamism with get entry at € 2,908 million primary to a e book to invoice ratio of 103%, drastically up compared to previous 12 months at 86%.

Q1 2020 earnings efficiency by Market

In € million	Q1 2020	Q1 2019*	Organic evolution
Manufacturing	539	555	-two.9%
Financial Companies & Insurance policies	527	542	-two.6%
General public Sector & Protection	584	566	+three.two%
Telecom, Media & Technologies	443	439	+.8%
Means & Companies	418	416	+.4%
Healthcare & Lifetime Sciences	323	340	-4.9%
Overall Team	two,834	two,858	-.8%
* At regular scope and trade costs

 

Manufacturing reached € 539 million of earnings, down -two.9% at regular scope and trade costs. The Market benefitted from a very good efficiency in Automotive with the ramp-up of a German car or truck company and Rheinmetall on knowledge management contracts, compensating the effects in Daimler because of to Covid-19 and the ramp down of PSA. Conversely, Manufacturing was impacted by decreased volumes with Siemens, a slowdown in the Aerospace sector because of to Covid-19, and various shifts of devices revenue toward the close of the quarter.

Financial Companies & Insurance policies earnings was € 527 million in the first quarter 2020, down by -two.6% organically. Northern Europe and Southern Europe benefited respectively from the ramp-up with Aegon in the United Kingdom, as very well as the improvement of activity with a payment company in France which have a lot more than compensated for the reduction of volumes from banking institutions in Central Europe. Rising marketplaces suffered from non-repeated revenue performed previous 12 months in APAC and Middle East & Africa. In North The united states, undertaking centered routines lessen presently noticed in previous quarters was accelerated in March because of to conclusions from various Financial Companies companies to postpone or minimize discretionary charges in the context of Covid-19.

General public Sector & Protection earnings was € 584 million, up +three.two% at regular scope and trade costs. The development was pushed by the powerful efficiency recorded in Northern Europe, thanks to the continuation of the agreement with European Centre for Medium array Weather conditions forecast as very well as with EU Lisa and smart knowledge system in Benelux. North The united states realized steadiness inspite of decreased volumes, thanks to more revenue on existing contracts. The problem was a lot more hard in Southern Europe, impacted by the ramp-down of High General performance Computing activity as very well as non-repeated revenue performed previous 12 months. Central Europe was negatively impacted by decreased volumes, and at last Rising Markets was impacted by earnings recorded previous 12 months for the Tokyo Olympic Video games preparation and not repeated this 12 months.

Telecom, Media & Technologies reached € 443 million, up +.8% organically, with a contrasted efficiency by geography and by activity. High Tech & Technologies posted a powerful development, pushed by Unified Interaction & Collaboration choices in Central Europe, sustained by organic and natural development of recently acquired company Maven Wave in North The united states and agreement ramp-up with a large companion, as very well as more revenue in Southern Europe. Media amplified as very well, benefitting from new small business improvement, coupled with larger volumes with existing shoppers in North The united states. Telecom activity was primarily impacted by some ramp-downs in Southern Europe.

Income in Means & Companies reached € 418 million and amplified by +.4% organically. Business enterprise in Energy & Utilities sector fueled the development. In certain, the Market delivered a High General performance Computer system in South The united states. Digital place of work providers ramped-up with a key Energy company in North The united states and with Countrywide Grid in Northern Europe. The problem in Retail, Transportation & Hospitality sectors was a lot more hard in the context of Covid-19. Certainly, though the ramp-up of a new IoT agreement signed in the location of predictive maintenance benefitted to North The united states, the Market faced quantity reductions in Europe.

Healthcare & Lifetime Sciences earnings was € 323 million, down by -4.9% compared to Q1 2019, impacted by quantity reductions on pretty distinct contracts in both equally North The united states and Northern Europe, though the market benefitted from the ramp-up of a global agreement with Bayer and a digital place of work agreement signed previous 12 months in Central Europe, and the ramp-up of an Australian General public Agency agreement in Rising Markets. Southern Europe benefitted from a powerful activity in digital tasks and High General performance Computing.

 

Q1 2020 earnings efficiency by Regional Business enterprise Unit

 

In € million	Q1 2020	Q1 2019*	Organic evolution
North The united states	681	699	-two.6%
Northern Europe	698	696	+.three%
Southern Europe	594	609	-two.6%
Central Europe	667	660	+one.%
Rising Markets	194	192	+one.%
Overall Team	two,834	two,858	-.8%
* At regular scope and trade costs

The first quarter of 2020 confirmed distinct earnings evolution by Regional Business enterprise Units which can be summarized as follows:

• In North The united states, earnings reached € 681 million, decreasing by -two.6% organically primarily coming from Covid-19 brought on undertaking stops and quantity reductions in various Industries. The Business enterprise Unit realized development in Telecom, Media & Technologies and Means & Companies thanks to new logo, larger volumes and ramp up of existing contracts
• In Northern Europe, earnings was about steady at € 698 million. Robust small business was recorded in General public Sector & Protection primarily led by the continuation of the HPC agreement with European Centre for Medium Vary Weather conditions Forecast, as very well as by deliveries to European Union Institutions. Telecom, Media & Technologies and Manufacturing faced some contracts ending and Healthcare & Lifetime Sciences a reduction on Business enterprise Course of action Outsourcing contracts
• In Southern Europe, earnings reached € 594 million, decreasing by -two.6% Healthcare & Lifetime Sciences posted a double-digit development thanks to digital tasks delivered and High General performance Computing routines. The geography was impacted by non-repeated revenue also on High General performance Computing routines performed previous 12 months in various Industries
• In Central Europe, the geography amplified organically by +one.% primary to a € 667 million Manufacturing benefitted from various ramp-up of infrastructure contracts and more tasks. Income in Telecom, Media & Technologies also amplified, pushed by Unified Interaction & Collaboration small business. Healthcare & Lifetime Sciences posted a double-digit development primarily fueled by new contracts. General public Sector & Protection was impacted by non-repeated revenue and tasks realized previous 12 months though new tasks in SAP HANA and in Digital have been performed in Germany and in Austria. Ultimately, Means & Companies was impacted by a decreased demand in Unify Interaction channels
• Rising Markets reached € 194 million earnings, +one.% Manufacturing posted a strong development, pushed by a larger stage of revenue as very well as much better demand in digital tasks primarily in Asia-Pacific and South The united states. Income in Source & Companies strongly amplified fueled by High General performance Computing activity in South The united states though the problem was a lot more hard in Financial Companies primarily in Asia Pacific.

Q1 2020 earnings efficiency by Division

 

In € million	Q1 2020	Q1 2019*	Organic evolution
Infrastructure & Data Administration	one,558	one,566	-.five%
Business enterprise & Platform Answers	one,016	one,069	-4.9%
Massive Data & Cybersecurity	259	223	+sixteen.three%
Overall Team	two,834	two,858	-.8%
* At regular scope and trade costs

In Infrastructure & Data Administration (IDM), earnings was € 1,558 million, -.five% organically. The Division ongoing to roll-out its transformation product by extending Hybrid Cloud Orchestration as very well as raising Digital Place of work implementation.

The distinct problem because of to Covid-19 pandemic needed a strong small business continuity for important infrastructures for its shoppers. Certainly, the Division recorded a powerful demand on Digital Place of work answers (accessing applications from wherever), organization communication choices with Unified Collaboration & Interaction, network connections, and so on. These routines are linked to the distant performing that has been place in place by a lot of firms to facial area the lockdown and sustain their activity.

Ultimately, in the existing context, the Division recorded much less earnings generated by devices revenue and fertilization in existing contracts in March.

In Business enterprise & Platform Answers (B&PS) earnings was € 1,016 million, -4.9% organically. As a reminder, the Division was down -one.two% in Q4 2019 because of to the headwinds in Financial Companies in North The united states as very well as in Automotive market in Germany, and hence did not anticipate any enhancement in the beginning of 2020 even right before Covid-19.

In the new context of Covid-19, the Division had to facial area a slowdown in most of the Industries. Certainly, this small business section is significantly a lot more dependent from the cycle and shoppers commenced in March to postpone discretionary tasks. The Team considers that the most impacted routines will be Technologies Expert Companies necessitating engineers performing on buyer web-sites, that can’t be performed on a distant method (circa 30% of Business enterprise & Platform Answers earnings). On the opposite, Software Growth and Servicing, centered on very long time period contracts ought to be resilient (circa forty% of Business enterprise & Platform Answers earnings). In involving, a large aspect of important Digital Assignments (circa 30% of Business enterprise & Platform Answers earnings) can be performed on a distant method, but the quantity of the small business will rely in the following months from the buyer demands on new tasks.

The small business in Massive Data & Cybersecurity (BDS) remained powerful with earnings up +sixteen.three% organically at € 259 million in the first quarter of 2020. In the existing context, the distant performing as very well as the increase of cyberattacks led firms to boost the stability of their infrastructure and knowledge. As examples, shoppers asked for a lot more answers of identification in speedy method, and consulting on the solidity of their stability infrastructure.

In Massive Data, there was no discontinuity in the provide chain thanks to pro-active inventory management. The demand stays powerful in High General performance Computing. As an example, distant access to SAP HANA involves more processing ability and hence more substantial desires of Sequana S in-memory servers. Ultimately, Mission Crucial Program small business also recorded a high earnings development.

Professional activity

In the course of the first quarter of 2020, the Team get entry reached € 2,908 million representing a E book to Invoice ratio of 103%, compared to 86% realized above the same period of time previous 12 months.

The key new contracts signed above the period of time have been notably in North The united states with a large American company in Protection Sector (Telecom, Media & Technologies), in Central Europe with Norddeutsche Landesbank (Financial Companies & Insurance policies) and a global european pharmaceutical company (Wellbeing & Lifetime Sciences) and in Southern Europe with a key utility in France and with Ile-de-France Mobilités (Means & Companies), as very well as with a French banking establishment (Financial Companies & Insurance policies).

Agreement renewals of the quarter integrated large signatures with notably the first aspect of the renewal of Texas Section of Facts Means agreement (General public Sector & Protection), the renewal of Conduent agreement (Telecom, Media & Technologies) in North The united states, a agreement with a Global European company in money products for SAP HANA (Manufacturing) in Central Europe, as very well as with the French UGAP (General public Sector & Protection) in Southern Europe.

In line with this dynamic industrial activity, the entire backlog amounted to € 22.one billion at the close of March 2020, representing one.9 12 months of earnings. The entire experienced pipeline reached € 7.6 billion, representing 7.8 months of earnings.

Human assets

The total headcount was 108,602 at the close of March 2020, broadly steady compared to 108,317 at the close of December 2019.

In the first quarter of 2020, the Team employed five,043 staff, primarily in offshore countries.

How Atos handles Covid-19 effects

Considering the fact that close of January, the Team management, supported by Team Human Means, has been focusing on the health and fitness and safety of staff though guaranteeing a appropriate implementation of pre-defined small business continuity ideas in every single Division.

The Team also activated the “Always Ready” program, pulling jointly all Team answers particularly tailored to this distressed problem and getting proactively offered to shoppers to assist them go through the disaster: assist to generalized homeworking together with collaboration features, distinct assist to public & health and fitness institutions, reinforcement of cybersecurity protections, and so on. Customers’ comments and satisfaction with regards to Atos teams reactivity has been overwhelmingly good. Atos is also involved into quite a few governmental tasks across the planet to struggle from the virus, and put together the progressive aid of constraints and lockdowns.

To defend its operating margin, the Team has taken powerful actions on its expense foundation in the pursuing areas:

• Robust centralized checking of staff expenses (hiring freeze, cancellation of salary improves, effects on variable compensation, holidays, and so on.)
• Substitution of subcontractors by personal freed up staff
• Cancellation of non buyer relevant discretionary charges
• Robust saving program on non staff expenses.

In total, the Team launched a program representing a total amount of c. four hundred million euros of savings in 2020.

Up to date 2020 targets submit Covid-19

As the 2020 targets disclosed on February 19, 2020 have been pre Covid-19 influence, the Team updates nowadays its three targets for the entire 12 months 2020, centered on the existing macroeconomic state of affairs of a progressive recovery above H2 2020 and 2021, as very well as the management’s every day discussions with Team shoppers:

• Income organic and natural evolution: involving -two% and -4% (as opposed to c. +two% pre Covid-19)
• Operating margin charge: 9% to 9.five% of earnings (as opposed to +20 bps to + forty bps higher than 2019 (10.three% reported) pre Covid-19)
• Totally free dollars stream: € .five billion to € .6 billion (as opposed to c. € .7 billion pre Covid-19)[*].

The Team suspends its targets for 2021, the previous 12 months of the three-12 months system offered at the Investor Day held on January 30, 2019. The Team will existing its vision as very well as its mid-time period targets at the 2020 Analyst Day (day to be rescheduled).

Postponement of Yearly Normal Meeting and fantastic cancellation of dividend payment in 2020

Owing to the fantastic circumstances linked to the Covid-19, the Board of Administrators, which met on March 31, 2020, has made a decision to postpone the Yearly Normal Meeting initially scheduled on May perhaps 14, 2020 to June 26, 2020.

In these unprecedented circumstances, through its session on April 21, 2020, the Board of Administrators took the fantastic final decision not to suggest the one.forty euro for every share dividend which was initially thought of to be submitted to the Yearly Normal Meeting. In addition, the Chief Government Officer as very well as other associates of the Normal Administration Committee have made a decision to minimize by 30% their compensation through the existing three-month period of time from March to May perhaps 2020. The Chairman of Atos’ Board of Administrators has built the same final decision.

The Team confirms that the cancellation of the dividend this 12 months is an exception to its dividend coverage with a fork out-out ratio involving 25% and 30% of Net money Team share.

 

Appendix

Income at regular scope and trade costs reconciliation

In € million	Q1 2020	Q1 2019	% change
Statutory earnings	two,834	two,818	+.6%
Trade costs influence		26
Income at regular trade costs	two,834	two,843	-.three%
Scope influence		14
Trade costs influence on acquired/disposed perimeters		one
Income at regular scope and trade costs	two,834	two,858	-.8%

Scope results amounted to €+14 million for earnings and are primarily relevant 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 (three months for €+4 million), the acquisition of X-PERION, consolidated as of December one, 2019 (three months for €+two million), the disposal of some distinct Unified Interaction & Collaboration routines mostly in Q1 2020 (total restatement of €-4 million) as very well as previous ITO routines in the United kingdom beginning of H2 2019 (three months for €-4 million), and at last the disposal and decommissioning of non-strategic routines inside of CVC.

Forex trade costs results mostly arrived from the American greenback as very well as the British pound and positively contributed to earnings for €+26 million.

 

Meeting phone

Today, Wednesday, April 22, 2020, the Team will keep a convention phone in English at 08:00 am (CET – Paris), chaired by Elie Girard, CEO, in get to remark on Atos’ Q1 2020 earnings and answer issues from the monetary local community.

You can sign up for the webcast of the convention:

• on net, in the Traders part
• by smartphones or tablets through the scan of:
• by telephone with the dial-in, five-10 minutes prior the beginning time:
  • France             +33 one 70 70 07 81       code 12652364
  • Germany             +49 sixty nine 2222 2625       code 12652364
  • United kingdom             +44 844 481 9752       code 12652364
  • US             +one 646 741 3167         code 12652364
  • Other countries +44 2071 928338        code 12652364

Just after the convention, a replay of the webcast will be available on atos.net, in the Traders part.

 

Forthcoming functions

June 26, 2020              Yearly Normal Meeting

July 27, 2020               Initial 50 percent 2020 final results

Oct 22, 2020         Third quarter 2020 earnings

To be scheduled            2020 Analyst Day