Atos Q2: share price sinks as operating income down

Operating income was down €434m (£372.38m) compared to €-298m in the first half of 2022

Atos' first half of 2023 isn't looking bright after its Q2 financial report which highlighted a plummeting operating income and caused shares price to drop by 20 per cent.

The report showed operating income down by €434m (£372.38m), compared to the first half of 2022 when operating income was down by €298m (£255.69m).

Atos said this was due to reorganisation costs in H1 2023, reflecting intensified workforce adaptation actions, within Tech Foundations, including the accrual of a restructuring plan in Germany, as well as within Eviden.

The French giant has been on a journey of divestment and restructuring for some time. In March 2023, it sold its logistics software business to Hardis Group and earlier this month entered talks to sell EcoAct.

In its results, the company focused their attention on the commercial growth noticed in Q2 which it claimed was a good sign for the future.

"Atos H1 results reflect our continued operational improvement and demonstrate the effectiveness of our strategy," declared Atos' leadership team, Nourdine Bihmane, Diane Galbe and Philippe Oliva.

"Our robust H1 organic growth prompted an upgrade to our full-year outlook, and our operating margin more than tripled compared to H1 last year, thanks to strong execution of our transformative initiatives.

"While we improved our underlying operational cash generation by €144m (£123.56m), our free cash flow reflects the intense pace of delivery on our major transformative actions carried out through 2023, including margin expansion through restructuring and tackling underperforming contracts, internal carve-out and working capital normalisation.

"We have achieved key milestones in our strategic project, notably the successful completion of separating our internal operations into two entities, enabling us to sharpen our focus, enhance our agility and better serve our customers.

"Within a 12-month timeframe, we have also fully secured our €700m (£600.62m) disposal programme of non-core businesses, which has streamlined our portfolio and contributed to the financing of our ongoing transformation.

"We would like to express our gratitude to all Atos teams for their unwavering dedication and commitment, which have played a decisive role in the results achieved so far."

The report also showed that group revenue was €5.55bn (£4.76bn) in H1 2023, up 2.3 per cent on an organic basis, as positive business trends continued into Q2.

Eviden delivered 7.0 per cent organic growth in H1 (up 4.6 per cent in Q2).

In June 2023, Eviden partnered with AWS to launch AIsaac Cyber Mesh, a cybersecurity detection and response solution powered by generative AI technologies. Advanced computing grew driven by HPC and servers designed for artificial intelligence and machine learning.

Atos said that despite the impact of contract portfolio rationalisation in H1 2023, digital's organic growth improved compared to the same period last year, driven by platforms and cloud transformation services, along with positive trends in the public sector in Europe.

Tech Foundations' core business revenue saw a slight decrease in H1 (down just 0.1 per cent organic).

The decline of hybrid cloud and infrastructure continued to soften, while other core business lines posted moderate growth.

Simultaneously, Tech Foundations remained committed to reducing non-core activities (BPO, hardware and software resale) as part of its ongoing portfolio reshaping efforts.

UCC, in the process of being divested, grew its revenue in H1. As a result, Tech Foundations recorded a slight organic decrease of -1.6 per cent in total revenue in H1 2023.

At the Group level, changes in perimeter accounted for -1.7 per cent, primarily reflecting the divestment of Atos Italian operations, finalised on April 3, 2023, and of Russian activities in September 2022.