Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Atos SE (AEXAF, Financial) has secured an agreement with financial creditors, ensuring ample liquidity and no debt maturing before the end of 2029.
- The company successfully delivered the UEFA EURO football club and is fully mobilized for the Paris Olympic and Paralympic Games.
- Atos SE (AEXAF) achieved an 88% success rate on contract renewals, demonstrating strong customer confidence.
- The company is investing in future growth, prioritizing client capital expenditure and R&D.
- Headcount adjustments and lower attrition rates indicate effective workforce management.
Negative Points
- Group revenue decreased by 2.7% organically compared to the first half of 2023.
- Operating margin declined to 2.3% of revenue, down from 3.3% in H1 2023.
- Free cash flow was negative at EUR1.9 billion for the first half of 2024.
- Revenue in the Americas decreased by 6.9% organically, reflecting a market slowdown.
- Net loss group share was EUR1.1 billion, impacted by goodwill and other intangible impairment charges.
Q & A Highlights
Q: Could you comment on the outlook for H2 and the working capital optimization actions planned for H2?
A: Jean Pierre Mustier (Chairman & CEO): Our outlook for H2 remains in line with the business plan shared on April 29th. We are on track to deliver the numbers as communicated. Regarding working capital, we plan to unwind and no longer repeat one-off working capital optimization actions. This trend will continue going forward.
Q: Can you clarify the impact of the EUR600 million excluding the unwinding of working capital optimization?
A: Jean Pierre Mustier (Chairman & CEO): The EUR600 million was stated excluding the unwinding of working capital actions. This means the EUR600 million minus the unwinding actions would result in a different figure.
Q: How do you see the book-to-bill ratio evolving in the coming quarters?
A: Jacques Francois De Prest (Group CFO): We are focused on client growth and restoring trust. Early signs indicate clients are looking at us more favorably, which should positively impact our ability to develop new contracts. We expect the book-to-bill ratio to return to normal levels soon.
Q: What is the broader demand picture in the US for both Eviden and Tech Foundations, and the outlook for H2?
A: Carlo d'Asaro Biondo (COO): In the US, customers are rethinking their approach due to the importance of AI and hybrid cloud, delaying decisions. However, our sales pipeline has increased significantly, and we expect recovery in H2.
Q: What should be the impact of contract completions on the second half at the Group level?
A: Carlo d'Asaro Biondo (COO): We do not expect significant reductions in scope in the near future. The major impacts have already been seen.
Q: Could you discuss the outlook for BDS in H2, particularly regarding the large project in Europe?
A: Carlo d'Asaro Biondo (COO): BDS sales in high-performance computing have been successful. We will deliver a significant sale in Central Europe next semester, which should yield substantial returns. We also have other sales in South America, India, and other regions, contributing to our performance in H2 and beyond.
Q: How do you see the commercial activity and order entry evolving in the coming quarters?
A: Carlo d'Asaro Biondo (COO): We have seen a significant reacceleration in sales and order entry in the latter part of the semester. Delays in customer decisions are resolving, and we expect order entry to increase, bringing us closer to our normal book-to-bill ratio.
Q: What are the key elements impacting the net loss and free cash flow for H1 2024?
A: Jacques Francois De Prest (Group CFO): The net loss of EUR1.9 billion was mainly due to goodwill and other intangible impairment charges. Free cash flow was minus EUR1.9 billion, reflecting a planned reduction in working capital optimization and increased investments in customer contracts and R&D.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
