Atos, largest drop in the SBF 120 at mid-session on Friday November 18, 2022

(AOF) –

Atos

(-3.20% to 10.58 euros)

The French computer giant comes in at the bottom of the index mid-session. Atos has announced that it has entered into “exclusive negotiations” to sell its activities in Italy. The potential buyer is the Italian provider of IT services and solutions Lutech.

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Key points

– International leader in digital transformation created in 1997, European leader in cloud, cybersecurity and supercomputers;

– Activity of €10.8 billion, divided into 3 divisions: infrastructure, outsourcing and private cloud for 55% of sales, digital, IoT and cloud solutions for 32% and big data & cybersecurity for 13%;

– Geographical balance of revenues: 23% of sales in North America, 25% in Northern Europe, 23% in Central Europe and 22% in Southern Europe;

– Value maximization business model through restructuring and the division, at the end of 2023, of the group into 2 separate entities – Atos for outsourcing and Evidian for digital and security;

– Open capital (9.96% for the Siemens pension fund and 2.2% for employees), Bertrand Meunier chairing the 13-member board of directors, Nourdine Bihman being managing director;

– Financial situation under control with €3.5 billion in gross cash at the end of June, then obtaining bank financing of €2.7 billion to cover the cost of restructuring linked to the demerger.

Challenges

– Strategy for the second half of 2023 to split the group into 2 companies, Tech Fondations for outsourcing (infrastructure) and connected work environments and Evidian for digital transformation, big data and security:

– Tech Fondations: recovery financed to the tune of €1.1 billion, with return to revenue growth, operating margin of 6% and free cash flow of €150 million in 2026,

– Evidian: repositioning of the portfolio and strengthening of leading positions with raised margins via a €400 million plan to accelerate its growth to 7% per year until 2026, with an operating margin of 12% and free cash flow of €700 million,

– at the end of 2023, distribution to Atos shareholders of 100% of the shares of Tech Fondations and 70% of those of Evidian, which will then be listed on Euronext Paris in early 2023;

– Innovation strategy developed in 18 R&D centers with a portfolio of 3,000 patents:

– open innovation via partnerships with university centers (quantum computing, exascale computers, artificial intelligence, HPC, multicultural leadership, etc.), with alliances with other players (AWS, Dell, Google, Huma, Microsoft, OVHCloud, Sparkle…) and with customers,

– 2 scientific communities of expert collaborators of the group,

– Scaler program of collaboration with + 50 start-ups;

– Environmental strategy supported by the Digital Transformation Factory, the Hybrid Cloud, the “Business Accelerators” solutions, the “Connected Intelligence” and the “Digital Workplace”:

– carbon neutrality in 2028 and halving of emissions by 2025 vs 2021,

– sales of decarbonization solutions, reinforced by the acquisition of EcoAct,

– investments in hydrogen supercomputers and quantum technologies,

– launch of the 1st “green” loan;

– Progress in security with the British Cloudreach and the Sovereign center in Bulgaria.

Challenges

– Rise in the 4th quarter of order intake, to 71% of revenues at the end of September;

– Control of debt leverage, 3.75%;

– Interest of private funds for one or the other of the divided activities;

– After the return to growth (5.7%) in sales in the 3rd quarter, 2022 objectives specified: increase in turnover at the top of the range (0.5% to 1.5%) and operating margin in the bottom of the range of 3% to 5% and cash flow at the bottom of the range of -150 to 200 M€.

Maximum staff turnover

Companies in the IT services sector have seen the departure of more than 20% of their workforce in twelve months. This trend is not unusual in the sector, but it is reaching an unprecedented scale, in a context of strong growth and good recruitment dynamics. In addition, employees have new requirements and aspirations. The main criterion is the flexibility of work and the way it is implemented in the company. The American-Indian company Cognizant saw around 35% of its 330,000 engineers leave the company in one year. Capgemini, grouping 32,000 French employees, recently suffered its first strike since 2008, with a demand for a collective increase in remuneration.

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Atos, largest drop in the SBF 120 at mid-session on Friday November 18, 2022


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