Atos Shares Dive on Profit Warning Amid Supply-Chain Issues, Project Delays

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by Ed Frankl and Giulia Petronic

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Shares of Atos SE said on Monday that its 2021 results were lower than expected due to project delays and supply-chain challenges.

At 0850 GMT, shares were down 16% at EUR32.38, having fallen as much as 19% in early trading.

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The French IT company said it generated revenue of about 10.8 billion euros ($12.27 billion) for the full year, a decline of about 2.4% at constant currency. This is compared to the already set target of stable revenue.

Operating margin was approximately 4% of revenue, up from a target of approximately 6%, primarily due to project slippage due to lower revenue and additional costs as well as supply-chain issues and customer postponements.

Atos also flagged a revenue hit from revaluation costs and deadlines for an outsourcing contract with a large UK financial institution, which reduced revenue growth by 0.7 percentage points.

The latest news marks a rocky start for new chief executive Rodolph Bellmer, who took office on January 3. He said he was obliged to issue a profit warning on Monday morning due to “significant variation in financial key performance indicators”.

Mr Bellmer said most of the underlying issues are non-recurring, including negative free cash flow of EUR 420 million by 2021, which he said was down to working capital. Atos previously targeted a positive free cash flow.

“I am confident that the company has the assets and all the talents needed for rapid turnaround,” said Mr. Bellmer.

The Paris-based company previously issued a profit warning in July, when it lowered its full-year margin expectations to 6% from between 9.4% and 9.8% and increased it to between 3.5% and 4.5%. There was steady revenue growth in comparison.

Mr Bellmer said he would introduce a new organizational structure in the announcement of full-year results on February 28 and a turnaround plan in the second quarter.

Write to Ed Frankl at [email protected]

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