Atos - comment

Atos released its Q1 numbers but the most important aspects were not number-related.  End result of announcement is a more severe debt forgiveness is likely following a revised business plan to be presented in the next couple of days.  Atos had expected a recovery to recommence in Q2 but they acknowledge there is still no improvement in underlying market conditions. This has led to an increase in new money needs and Atos have alluded to potential additional debt reduction.  We have always expected a higher debt reduction and future cash needs are likely to be equity financed.  The new business plan will be presented in the coming days and this change has led to extending the refinancing proposal deadline to May 3rd. The Company still targets a full refinancing agreement in July 2024. 

Clients are delaying signing contracts which has resulted in book-to-bill at 47% for Tech Foundations, and 64% overall, down from 73% in prior years, which is partially explained by the financial uncertainty surrounding Atos.   Operationally, organic revenue has declined by c. 2.5%, with Eviden declining by 4%. Eviden’s operating margins have declined to 2%, down 330bps organically. Tech Foundations had a marginally better operating margin, but still languishes at c.2%. Cash balances have reduced to €1bn from €2.4bn at year-end, reflecting a €1.3bn unwind in working Capital actions.