Atos posts its financial results for the first half of 2020

Atos, a global leader in digital transformation, today announced its financial results for the first half of 2020.

Elie Girard, CEO, said: “During the first half of 2020, in the very specific context of the pandemic, we prioritized the health and safety of our people, while ensuring business continuity to our customers by delivering critical services supported by our resilient business model. We also started early in the semester to prepare our customers for the post-Covid times through our Future-Ready portfolio of offerings. Thanks to this timely strategy and the unique profile of the Group, Revenue only declined by -2.8 % organically, with the bottom of the curve reached in Q2. While taking care of our customers in this very special period, our close to 110 000 colleagues around the world have achieved an outstanding commercial performance, with an Order Entry increased by close to 10% year-on-year. We signed in Q2 several large contracts encompassing Digital, Cloud and Security. Last but not least, the pipeline strongly increased by € 1.2bn, with customers progressively focusing on front-end transformation, Full Stack Cloud migration and Employee Experience while the demand also accelerates in Business Critical Applications, Digital Security as well as Decarbonization. In the latter domains, the acquisitions announced today will reinforce further our capabilities. This strong dynamic also reflects the fast progress in the implementation of our SPRING program driving Industry specific offerings and go-to-market approach while enhancing our culture of customer obsession. With these first results of the Group’s pivoting, we are definitely very well positioned to deliver all our objectives this year as an important step towards our mid-term targets disclosed at our 2020 Analyst Day last month.”

H1 2020 performance by Industry Revenue was € 5,627 million, down -2.8% organically. In the context of Covid-19 crisis, Group revenue decreased only slightly thanks to its solid positioning in most of the Industries.

• In Northern Europe, revenue was roughly stable at € 1,360 million. Strong business was recorded in Public Sector & Defense mainly led by the continuation of the new contract with European Centre for Medium-Range Weather Forecast, and with European Union Institutions. The situation was more challenging in Telecom, Media & Technology, impacted by application projects postponed and some contracts ramped down, as well as in Manufacturing due to the base effect of contracts ended in 2019;
• In Central Europe, revenue was stable at € 1,370 million, led by Big Data platforms in Public Sector & Defense, as well as new Digital Workplace contract with a global Life Sciences company and healthcare provider. The geography was impacted by application projects postponed particularly in Manufacturing (aerospace and automotive industries) and in Telecom, Media & Technology, as well as the legacy activity of Unified Communication & Collaboration. Conversely, the geography performed new sales with a large German manufacturer, new SAP Hana projects with Siemens, and increasing volumes with BASF and Rheinmetall;
• In Southern Europe, revenue reached € 1,143 million, decreasing by -7.0% The geography was impacted by application projects postponed particularly in Resources & Services and Telecom, Media & Technology, as well as non-repeated sales in High Performance Computing activities performed last year both in Public Sector & Defense and in Manufacturing;

Manufacturing reached € 1,037 million of revenue, down -9.2% at constant scope and exchange rates. The Industry was impacted by a significant decrease of its activity mainly in Q2 due to Covid-19 in the Automotive and Aerospace sectors, especially in Southern Europe, North America and Central Europe. The Industry was also impacted by lower volumes with Siemens, mainly in North America, and the base effect of contracts ended in 2019 in Northern Europe. Operating margin reached € 13 million, representing 1.2% of revenue, due to some one-offs on difficult contracts and as a consequence of the revenue drop, and impacted by the ability to reduce the costs only partially within the first semester.

Financial Services & Insurance revenue was € 1,077 million, down by -4.3% organically. The Industry was impacted mainly in Q2 by a decrease of activities as several banking institutions have postponed and reduced discretionary expenses in the context of Covid-19. This was more particularly the case in North America and Central Europe while sales performed last year in Growing Markets were not repeated. Operating margin was € 126 million, representing 11.7% of revenue, decreasing by -130 basis points compared to last year, mainly impacted by revenue decrease in North America.

Public Sector & Defense revenue was € 1,216 million, up +6.1% organically, accelerating in Q2 2020 to reach +9.0%. The growth was driven by a strong demand in High Performance Computing activities, mainly in Northern Europe with a weather forecast institution and in Central Europe with a research center, while projects delivered last year in Southern Europe were not repeated. All other businesses were very resilient; this was particularly the case with higher volumes with European Union Institutions in Cloud solutions in Northern Europe and new SAP Hana deals in Central Europe. Operating margin reached € 116 million, representing 9.5% of revenue, an improvement by +100 basis points, led by the growth of the activity, a better business mix and strong costs reduction initiatives.

Telecom, Media & Technology reached € 836 million, down -5.6% organically. The Industry was impacted by application projects postponed and some contracts ramped down in most of the geographies, as well as legacy activities of Unified Communication & Collaboration, more particularly in Central Europe. On the opposite, a strong performance was recorded in North America led by Digital Workplace offerings, the ramp-up of a contract signed in Q1 with a major engineering company, new businesses and extensions with large tech and media companies, and finally organic growth from newly acquired Maven Wave. Operating margin was € 84 million or 10.0% of revenue, up +380 basis points, led by positive one-off transactions and effective cost measures.

Revenue in Resources & Services reached € 804 million, down by -2.8% organically. The business was strong in Energy & Utilities but more challenging in Retail & Transportation due to the high exposure to the pandemic. The project activities were impacted by less discretionary expenses mainly in North America and Southern Europe. Legacy Unified Communication & Collaboration activities remained challenging particularly in Central Europe. Conversely, the business was strong in Big Data & Cybersecurity with new projects in Energy & Utilities in Southern Europe, Growing Markets, and Central Europe. Operating margin reached € 43 million, representing 5.3% of revenue, down -350 basis points, coming from the revenue decrease, which actions on costs could only partly compensate, and a lower margin in the start-up phase of some new contracts.

Healthcare & Life Sciences revenue was € 657 million. The revenue decrease was limited to -1.2%, as the Industry delivered +2.6% organic growth in Q2. Application projects were postponed particularly for hospitals in North America, while Southern Europe recorded a strong activity in Digital projects. Conversely, the business segments based on multi-year contracts were resilient and achieving a global stability in revenue over the semester with an acceleration during the second quarter. Operating margin was € 68 million, representing 10.3% of revenue, broadly stable compared to last year.