Friday, July 1, 2022

French tech company Atos' new boss aims to start on clean slate with $2.7 bln writedowns

French tech company Atos' new boss aims to start on clean slate with $2.7 bln writedowns

PARIS (Reuters) - Atos' new Chief Executive Rodolphe Belmer vowed on Thursday to start over with a clean slate after the French IT consulting group took total writedowns of 2.4 billion euros ($2.7 billion) in the second-half of 2021, driving the company's shares down 5%.

The company exited France's CAC 40 benchmark stock index and lost half of its market value last year after some accounting errors and a failed attempt to acquire a US group precipitated a loss in investor confidence, leading to the departure of Belmer's predecessor, Elie Girard.

Belmer, who formally took over as CEO on Jan. 20, a few days after Atos issued a profit warning for 2021 results, said the group would reorganise itself around three business units and revamp its 21-member executive committee.

"We have done the work comprehensively, thoroughly and we have done it once and for all," Belmer told analysts on a call, referring to the impairment charges.

"We can now turn the page and look forward to a whole new chapter for Atos," he added.

The impairment charges were divided up between a write-down of about 1.9 billion euros of its goodwill tied to a previous infrastructure acquisition and assets like data centres and IT equipment leases.

This comes on top of an impairment charge of about 500 million euros of contract asset, reserves for bad debts and provision for future losses, stemming in good part from a contract with a financial institution in Britain, Atos said.

Belmer said he would simplify the governance of the group, whose management committee comprises 21 executives - including him - which he said was overly complex and hindered performance by slowing down decision making. Details of the revamp will given after market close, a spokesperson said.

He confirmed that the group's BDS cybersecurity wasn't for sale. Sources told Reuters last week that defence company Thales was working on a plan to buy Atos.

Atos, formed partly by a string of acquisitions under former CEO Thierry Breton, now EU industry chief, has deep links to France's security industry in which the state has the ultimate say over tie-ups.

It also revised downwards its guidance for 2021, saying its operating margin in 2021 will be around 3.5% in 2021. On Jan. 10, it said this margin would be around 4%.

It now forecast a decrease of 2021 revenue of about 2.6% to 10.8 billion euros, compared with a previous forecast of a decrease of 2.4%.

Atos will present its turnaround plan and update its mid-term targets in the second quarter and report full-year earnings on Feb. 28.