First quarter of 2020 – Atos

A resilient profile and a sturdy equilibrium sheet to facial area an unprecedented problem

Income at € two,834 million

-.8% organic growth

E book to monthly bill ratio at 103%

Renewals of key contracts in North The usa

Appropriate small business combine to aid clients in Covid-19 context

Necessary price steps currently being implemented to secure operating margin

SPRING transformation plan to an Industry method properly on monitor

Update of 2020 goals put up Covid-19

 

Paris, April 22, 2020,

Atos, a world wide leader in digital transformation, currently announces the income of its initially quarter of 2020.

Elie Girard, CEO, explained: “In this unprecedented environment where uncertainty prevails, our initially priority has been to secure our employees though presenting complete continuity of provider to our clientele. The Team is solidly positioned to navigate effortlessly via the crisis many thanks to deep customer interactions across all industries, a resilient small business combine and a strong equilibrium sheet that presents a sturdy financial flexibility.

Our a hundred and ten,000 colleagues across the entire world have provided an quick and superb response to customers’ issues and want for aid via our “Always Ready” plan made presently considering that the starting of the yr. Now our minds and attempts are turning to the put up-Covid times, actively getting ready for the “new normal” which will see an acceleration in particular customers’ requirements, specifically data platforms, cybersecurity, cloud migration, digital place of work and decarbonization.

We revise currently our goals for 2020 demonstrating the resilience of the Team and the willingness to share any effect reasonably across stakeholders. I am confident that Atos will arise from this world wide crisis stronger than ever and prepared to go forward to the up coming 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 around the world where the Team operates, income decreased only a little bit many thanks to the resilient profile of its corporations based on multi-yr contracts combined with its solid small business in Massive Data and Cybersecurity. Moreover, and in spite of the crisis, the Team accelerated its professional dynamism with buy entry at € 2,908 million primary to a e book to monthly bill ratio of 103%, significantly up in comparison to final yr at 86%.

Q1 2020 income overall performance by Industry

In € million	Q1 2020	Q1 2019*	Natural and organic evolution
Producing	539	555	-two.9%
Money Providers & Insurance policy	527	542	-two.6%
Public Sector & Protection	584	566	+3.two%
Telecom, Media & Technology	443	439	+.8%
Methods & Providers	418	416	+.4%
Healthcare & Life Sciences	323	340	-4.9%
Whole Team	two,834	two,858	-.8%
* At consistent scope and exchange premiums

 

Producing reached € 539 million of income, down -two.9% at consistent scope and exchange premiums. The Industry benefitted from a excellent overall performance in Automotive with the ramp-up of a German car company and Rheinmetall on data administration contracts, compensating the effect 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 several shifts of gear sales to the conclude of the quarter.

Money Providers & Insurance policy income was € 527 million in the initially 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 properly as the enhancement of exercise with a payment company in France which have extra than compensated for the reduction of volumes from banking establishments in Central Europe. Escalating markets experienced from non-repeated sales performed final yr in APAC and Center East & Africa. In North The usa, task based activities lessen presently observed in previous quarters was accelerated in March due to choices from several Money Providers firms to postpone or lower discretionary expenditures in the context of Covid-19.

Public Sector & Protection income was € 584 million, up +3.two% at consistent scope and exchange premiums. The growth was driven by the sturdy overall performance recorded in Northern Europe, many thanks to the continuation of the agreement with European Center for Medium vary Weather conditions forecast as properly as with EU Lisa and good data system in Benelux. North The usa reached balance in spite of lower volumes, many thanks to additional sales on present contracts. The problem was extra challenging in Southern Europe, impacted by the ramp-down of Substantial General performance Computing exercise as properly as non-repeated sales performed final yr. Central Europe was negatively impacted by lower volumes, and eventually Escalating Markets was impacted by income recorded final yr for the Tokyo Olympic Video games planning and not repeated this yr.

Telecom, Media & Technology reached € 443 million, up +.8% organically, with a contrasted overall performance by geography and by exercise. Substantial Tech & Technology posted a sturdy growth, driven by Unified Interaction & Collaboration choices in Central Europe, sustained by organic growth of newly obtained company Maven Wave in North The usa and agreement ramp-up with a significant partner, as properly as additional sales in Southern Europe. Media greater as properly, benefitting from new small business enhancement, coupled with bigger volumes with present clients in North The usa. Telecom exercise was predominantly impacted by some ramp-downs in Southern Europe.

Income in Methods & Providers reached € 418 million and greater by +.4% organically. Small business in Electrical power & Utilities sector fueled the growth. In distinct, the Industry shipped a Substantial General performance Laptop or computer in South The usa. Electronic place of work products and services ramped-up with a key Electrical power service provider in North The usa and with Nationwide Grid in Northern Europe. The problem in Retail, Transportation & Hospitality sectors was extra challenging in the context of Covid-19. Certainly, though the ramp-up of a new IoT agreement signed in the region of predictive maintenance benefitted to North The usa, the Industry faced volume reductions in Europe.

Healthcare & Life Sciences income was € 323 million, down by -4.9% in comparison to Q1 2019, impacted by volume reductions on extremely particular contracts in the two North The usa and Northern Europe, though the market benefitted from the ramp-up of a world wide agreement with Bayer and a digital place of work agreement signed final yr in Central Europe, and the ramp-up of an Australian Public Agency agreement in Escalating Markets. Southern Europe benefitted from a sturdy exercise in digital projects and Substantial General performance Computing.

 

Q1 2020 income overall performance by Regional Small business Device

 

In € million	Q1 2020	Q1 2019*	Natural and organic evolution
North The usa	681	699	-two.6%
Northern Europe	698	696	+.3%
Southern Europe	594	609	-two.6%
Central Europe	667	660	+one.%
Escalating Markets	194	192	+one.%
Whole Team	two,834	two,858	-.8%
* At consistent scope and exchange premiums

The initially quarter of 2020 showed different income evolution by Regional Small business Units which can be summarized as follows:

• In North The usa, income reached € 681 million, decreasing by -two.6% organically predominantly coming from Covid-19 caused task stops and volume reductions in several Industries. The Small business Device reached growth in Telecom, Media & Technology and Methods & Providers many thanks to new emblem, bigger volumes and ramp up of present contracts
• In Northern Europe, income was roughly secure at € 698 million. Robust small business was recorded in Public Sector & Protection predominantly led by the continuation of the HPC agreement with European Centre for Medium Assortment Weather conditions Forecast, as properly as by deliveries to European Union Establishments. Telecom, Media & Technology and Manufacturing faced some contracts ending and Healthcare & Life Sciences a reduction on Small business Process Outsourcing contracts
• In Southern Europe, income reached € 594 million, decreasing by -two.6% Healthcare & Life Sciences posted a double-digit growth many thanks to digital projects shipped and Substantial General performance Computing activities. The geography was impacted by non-repeated sales also on Substantial General performance Computing activities performed final yr in several Industries
• In Central Europe, the geography greater organically by +one.% primary to a € 667 million Producing benefitted from several ramp-up of infrastructure contracts and additional projects. Income in Telecom, Media & Technology also greater, driven by Unified Interaction & Collaboration small business. Healthcare & Life Sciences posted a double-digit growth predominantly fueled by new contracts. Public Sector & Protection was impacted by non-repeated sales and projects reached final yr though new projects in SAP HANA and in Electronic were performed in Germany and in Austria. Eventually, Methods & Providers was impacted by a lower demand in Unify Interaction channels
• Escalating Markets reached € 194 million income, +one.% Producing posted a solid growth, pushed by a bigger level of sales as properly as stronger demand in digital projects predominantly in Asia-Pacific and South The usa. Income in Resource & Providers strongly greater fueled by Substantial General performance Computing exercise in South The usa though the problem was extra challenging in Money Providers predominantly in Asia Pacific.

Q1 2020 income overall performance by Division

 

In € million	Q1 2020	Q1 2019*	Natural and organic evolution
Infrastructure & Data Administration	one,558	one,566	-.five%
Small business & Platform Alternatives	one,016	one,069	-4.9%
Massive Data & Cybersecurity	259	223	+16.3%
Whole Team	two,834	two,858	-.8%
* At consistent scope and exchange premiums

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

The particular problem due to Covid-19 pandemic required a solid small business continuity for critical infrastructures for its clients. Certainly, the Division recorded a sturdy demand on Electronic Place of work alternatives (accessing applications from wherever), company conversation choices with Unified Collaboration & Interaction, community connections, and many others. These activities are connected to the remote working that has been place in position by a whole lot of organizations to facial area the lockdown and sustain their exercise.

Eventually, in the latest context, the Division recorded a lot less income generated by gear sales and fertilization in present contracts in March.

In Small business & Platform Alternatives (B&PS) income was € 1,016 million, -4.9% organically. As a reminder, the Division was down -one.two% in This autumn 2019 due to the headwinds in Money Providers in North The usa as properly as in Automotive market in Germany, and for that reason did not count on any improvement in the starting of 2020 even in advance of Covid-19.

In the new context of Covid-19, the Division experienced to facial area a slowdown in most of the Industries. Certainly, this small business section is substantially extra dependent from the cycle and clients commenced in March to postpone discretionary projects. The Team considers that the most impacted activities will be Technology Professional Providers necessitating engineers working on customer internet sites, that can not be performed on a remote method (circa 30% of Small business & Platform Alternatives income). On the opposite, Software Growth and Routine maintenance, based on prolonged phrase contracts need to be resilient (circa forty% of Small business & Platform Alternatives income). In amongst, a significant part of critical Electronic Projects (circa 30% of Small business & Platform Alternatives income) can be performed on a remote method, but the volume of the small business will depend in the up coming months from the customer needs on new projects.

The small business in Massive Data & Cybersecurity (BDS) remained sturdy with income up +16.3% organically at € 259 million in the initially quarter of 2020. In the latest context, the remote working as properly as the increase of cyberattacks led organizations to reinforce the safety of their infrastructure and data. As examples, clients requested for extra alternatives of identification in brief method, and consulting on the solidity of their safety infrastructure.

In Massive Data, there was no discontinuity in the supply chain many thanks to pro-lively stock administration. The demand continues to be sturdy in Substantial General performance Computing. As an case in point, remote obtain to SAP HANA necessitates additional processing electricity and for that reason bigger requirements of Sequana S in-memory servers. Eventually, Mission Critical Procedure small business also recorded a high income growth.

Commercial exercise

Through the initially quarter of 2020, the Team buy entry reached € 2,908 million representing a E book to Bill ratio of 103%, in comparison to 86% reached over the very same time period final yr.

The main new contracts signed over the time period were notably in North The usa with a significant American company in Protection Sector (Telecom, Media & Technology), in Central Europe with Norddeutsche Landesbank (Money Providers & Insurance policy) and a world wide european pharmaceutical company (Well being & Life Sciences) and in Southern Europe with a key utility in France and with Ile-de-France Mobilités (Methods & Providers), as properly as with a French banking institution (Money Providers & Insurance policy).

Deal renewals of the quarter included significant signatures with notably the initially part of the renewal of Texas Division of Information and facts Methods agreement (Public Sector & Protection), the renewal of Conduent agreement (Telecom, Media & Technology) in North The usa, a agreement with a World wide European company in cash items for SAP HANA (Producing) in Central Europe, as properly as with the French UGAP (Public Sector & Protection) in Southern Europe.

In line with this dynamic professional exercise, the complete backlog amounted to € 22.one billion at the conclude of March 2020, representing one.9 yr of income. The complete certified pipeline reached € 7.6 billion, representing 7.8 months of income.

Human sources

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

In the initially quarter of 2020, the Team employed five,043 employees, predominantly in offshore nations around the world.

How Atos handles Covid-19 effect

Given that conclude of January, the Team administration, supported by Team Human Methods, has been focusing on the wellness and security of employees though making sure a suitable implementation of pre-outlined small business continuity ideas in each individual Division.

The Team also activated the “Always Ready” plan, pulling together all Team alternatives specially adapted to this distressed problem and currently being proactively made available to clients to help them go via the crisis: aid to generalized homeworking including collaboration features, particular aid to general public & wellness establishments, reinforcement of cybersecurity protections, and many others. Customers’ feed-back and pleasure with regards to Atos groups reactivity has been overwhelmingly good. Atos is also concerned into lots of governmental projects across the entire world to fight against the virus, and prepare the progressive reduction of restrictions and lockdowns.

To secure its operating margin, the Team has taken sturdy steps on its price foundation in the pursuing places:

• Robust centralized monitoring of personnel charges (using the services of freeze, cancellation of income will increase, effect on variable compensation, vacations, and many others.)
• Replacement of subcontractors by possess freed up employees
• Cancellation of non customer similar discretionary expenditures
• Robust preserving plan on non personnel charges.

In total, the Team introduced a plan representing a total sum of c. four hundred million euros of personal savings in 2020.

Current 2020 goals put up Covid-19

As the 2020 goals disclosed on February 19, 2020 were pre Covid-19 result, the Team updates currently its a few goals for the complete yr 2020, based on the latest macroeconomic scenario of a progressive restoration over H2 2020 and 2021, as properly as the management’s everyday conversations with Team clients:

• Income organic evolution: amongst -two% and -4% (compared to c. +two% pre Covid-19)
• Functioning margin rate: 9% to 9.five% of income (compared to +twenty bps to + forty bps higher than 2019 (ten.3% noted) pre Covid-19)
• Cost-free money circulation: € .five billion to € .6 billion (compared to c. € .7 billion pre Covid-19)[*].

The Team suspends its targets for 2021, the final yr of the a few-yr prepare offered at the Investor Working day held on January 30, 2019. The Team will present its eyesight as properly as its mid-phrase targets at the 2020 Analyst Working day (day to be rescheduled).

Postponement of Yearly Typical Assembly and remarkable cancellation of dividend payment in 2020

Due to the remarkable situations connected to the Covid-19, the Board of Directors, which fulfilled on March 31, 2020, has determined to postpone the Yearly Typical Assembly in the beginning scheduled on May possibly 14, 2020 to June 26, 2020.

In these unprecedented situations, for the duration of its session on April 21, 2020, the Board of Directors took the remarkable choice not to suggest the one.forty euro per share dividend which was in the beginning considered to be submitted to the Yearly Typical Assembly. In addition, the Chief Govt Officer as properly as other associates of the Typical Administration Committee have determined to lower by 30% their compensation for the duration of the latest a few-thirty day period time period from March to May possibly 2020. The Chairman of Atos’ Board of Directors has built the very same choice.

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

 

Appendix

Income at consistent scope and exchange premiums reconciliation

In € million	Q1 2020	Q1 2019	% alter
Statutory income	two,834	two,818	+.6%
Exchange premiums result		26
Income at consistent exchange premiums	two,834	two,843	-.3%
Scope result		14
Exchange premiums result on obtained/disposed perimeters		one
Income at consistent scope and exchange premiums	two,834	two,858	-.8%

Scope consequences amounted to €+14 million for income and are predominantly similar to the acquisition of Maven Wave, consolidated as of February one, 2020 (two months for €+eighteen million), the acquisition of IDnomic, consolidated as of October 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 particular Unified Interaction & Collaboration activities primarily in Q1 2020 (total restatement of €-4 million) as properly as former ITO activities in the United kingdom starting of H2 2019 (3 months for €-4 million), and eventually the disposal and decommissioning of non-strategic activities in just CVC.

Forex exchange premiums consequences primarily came from the American greenback as properly as the British pound and positively contributed to income for €+26 million.

 

Convention get in touch with

These days, Wednesday, April 22, 2020, the Team will maintain a meeting 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 income and reply thoughts from the financial local community.

You can be a part of the webcast of the meeting:

• on internet, in the Traders section
• by smartphones or tablets via the scan of:
• by telephone with the dial-in, five-ten minutes prior the commencing time:
  • France             +33 one 70 70 07 81       code 12652364
  • Germany             +forty nine sixty nine 2222 2625       code 12652364
  • United kingdom             +44 844 481 9752       code 12652364
  • US             +one 646 741 3167         code 12652364
  • Other nations around the world +44 2071 928338        code 12652364

Soon after the meeting, a replay of the webcast will be obtainable on atos.internet, in the Traders section.

 

Forthcoming gatherings

June 26, 2020              Yearly Typical Assembly

July 27, 2020               First fifty percent 2020 benefits

October 22, 2020         Third quarter 2020 income

To be scheduled            2020 Analyst Working day