Atos says it has secured funding for its transformation plan, the stock jumps
(updated with stock market reaction,)
PARIS, July 27 (Reuters) – Atos ATOS.PA said on Wednesday it had ‘successfully secured’ funding for its transformation plan and expects revenue growth to accelerate in the second half and strengthen its listing on the Paris Stock Exchange.
The group is going through a period of turmoil and has struggled to reassure investors in recent months, marked by two changes at the top and the downgrade of its credit rating to BB by rating agency S&P in mid-July.
The Atos stock rose more than 6% in the morning session, outperforming a Paris market that was up 0.4% at the same time, but was still down nearly 70% year-to-date.
The IT and cybersecurity group reported a “strong improvement in business momentum” in its press release on its first-half results, illustrated in particular by the strong increase in the order intake-to-sales ratio to 101% in the second quarter, compared to 72 % in the first quarter.
“This increase in commercial momentum (…) demonstrates the strong support of Atos customers for the envisaged transformation plan, with more than €0.6 billion in new orders signed following its announcement,” reads the press release.
Atos announced almost simultaneously last month a plan to split up its operations ahead of potential divestitures and the departure of its CEO, Rodolphe Belmer, prompting a fresh bout of distrust in the stock market.
➦ Atos split plan and departure of CEO unsettle investors
Atos also reports negative free cash flow for the first half of the year at -€555 million and expects it to remain in the red for the full year, “at the lower end of the range of -€150 million to €200 million, excluding the additional impact of the planned transformation plan”, which are “estimated at around -250 million euros, including financing costs”.
Therefore, if the group plans to burn nearly half a billion cash in 2022, “excluding the additional costs associated with the transformation plan, free cash flow should improve very significantly,” with the significant rebound in operating margin expected in H2.
Atos maintains its 2022 revenue growth target of between -0.5% and +1.5% at constant exchange rates and targets an operating margin for the year “in the lower range of 3% to 5%” previously defined.
The group also emphasizes in its press release that the financing of its transformation plan is “successfully secured”.
“The transitional period is now fully financed and the group’s liquidity has been significantly strengthened,” it said.
The group has received commitments from the banks for a 1.5 billion euro term loan and a 900 million euro revolving credit facility, specifying that “the final documents are expected to be signed in the coming days”.
Announcing its transformation plan in June, Atos announced the sale of non-strategic assets worth around €700m, of which €480m has yet to find a buyer.
The group has already sold its 2.5% stake in payments company Worldline WLN.PA as part of this divestment plan, raising €219 million.
(Written by Myriam Rivet, edited by Nicolas Delame and Kate Entringer)