PARIS (Reuters) -Loss-making French IT consulting firm Atos reported first-half sales in line with expectations but said it would burn close to half a billion euros in 2022 as it adopts a transformative turnaround plan to restore investor confidence.
First-half sales fell by 0.6% in constant currency terms from a year earlier to 5.56 billion euros ($5.64 billion), in line with a median estimate of 5.52 billion from 10 analysts canvassed by the company.
The group burnt 555 million euros in the first half and said it expected to burn up to 450 million euros in the full year, thanks to the improvement of cash flow generation in the second-half.
It said now expects its full-year operating margin to be in the lower end of the 3% to 5% range it previously expected. It also stressed that the improving commercial momentum seen in the second quarter will continue in the second half of the year.
Like other peers, Atos faces high levels of employee turnover and wage inflation which weigh on its margins. It is also dealing with the consequences of its slower move to cloud computing-related services as compared to some rivals.
The first six months of the year were particularly turbulent for the group formerly headed by the European Union industry’s chief Thierry Breton, as it went through two governance reshuffles and a painful downgrade of its debt to junk status by ratings firm S&P.
The difficult period reached its climax in June with the sudden departure of Rodolphe Belmer following a rift with the board over strategy, just a few months after his nomination as CEO.
Belmer said he would leave the group on the day Atos presented its plan to split the company in two groups, with the aim to spin off and combine its most juicy assets, including its cybersecurity division BDS.
Dubbed Evidian, these operations combined generated 4.9 billion euros in revenue in 2021, up by 5% from the previous year, and an operating margin of 7.8%.
The other entity is set to include its declining and loss-making IT infrastructure management services, which had sales of 5.4 billion euros last year.
Atos said it had secured the 1.5 billion euros worth of financing needed for the plan, which includes investments and restructuring costs for both upcoming separate entities, with final documentation to be signed with banks “in the next few days”.
The group had initially said that the sale of 700 million euros worth of non-core assets would finance that plan. It still has to find buyers for 480 million euros worth of assets.
(Reporting by Mathieu Rosemain; Editing by Kim Coghill and Stephen Coates)
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