Atos issues profit warning following project delays

This second profit warning in seven months comes days after the French SI welcomed its new CEO

Atos has issued its second profit warning in seven months in its preliminary FY2021 financial figures.

The French services giant told investors the revised guidance communicated in July last year will not be met due to "several significant effects" - more on which, below.

Atos had already lowered its annual objectives following a slower-than-expected recovery in the first half of the year.

The company now expects a 2.4 per cent drop in its 2021 full year revenues, totaling €10.8bn against the previous forecast for a "stable" performance.

It also predicts an operating margin of four per cent, down from the formerly stated six per cent target.

As for free cash flow, Atos estimates the figure to come in at -€420m compared to a previous forecast for positive free cash flow.

'Several significant effects': why the slump?

Atos attributed its revenue drop to the "unexpected" reassessment of the cost to go on transformation, replatforming and operations of a financial services BPO contract, leading to a "major revision" of the completion rate on the project.

Other factors affecting the group's performance include big data, HPC and unified communications & collaboration project slippages due to supply chain challenges; delays on expected contracts; and the reduced level of low margin hardware and software resale.

New CEO off to a rocky start

The revised figures come just days after the group's new CEO, Rodolphe Belmer took the help of the company.

"I joined the company last week, at the time when the figures were being collected and consolidated," he said.

"The current state of financial insight leads us to the obligation to issue a profit warning today due to the significant variance in the financial KPIs.

"However, most of the items underlying this severe gap are non-recurring. In particular, the large gap in Free Cash Flow mostly stems from working capital."

Belmer added he believes Atos has the "assets" and "talents" to operate a swift turnaround.

Atos clarified the figures are not finalised at this stage nor audited. The detailed full year figures for 2021, including potential impairment further to the assessment of the recoverable amount of assets, will be published as planned on February 28.