Atos’ Boss Will Start on Clean Slate with $2.7 Billion Writedowns
On Thursday, Rodolph Belmer, the new chief executive of Atos, vowed to begin with a clean slate after the second half of 2021 saw the French IT consulting group take total writedowns of about 2.4 billion euros. This had pushed down the shares of the company by almost 5%. Last year, the company lost almost half of its market value and had to exit from the French CAC 40 benchmark stock index because of some accounting errors as well as a failed attempt of acquiring a US group. This had resulted in a loss of investor confidence, which led to the departure of Ellie Girard, Belmer’s predecessor. On January 20th, Belmer had formally taken over the position of CEO.
This was a couple of days after Atos had issued a warning about profits for its 2021 results. The new CEO said that the company would focus on revamping its 21-member executive committee and reorganizing its three business units. Speaking to analysts, Belmer said that they had done thorough and comprehensive work and they had done it all. He added that it was time for them to turn the page and begin a completely new chapter for the company. The impairment charges had been divided between assets and infrastructure, such as IT equipment leases and data centers, and a write-down of its goodwill of about 1.9 billion euros associated with a previous acquisition of infrastructure.
This came after an existing impairment charge of contract assets, provision for future losses, and reserves for bad debts of about 500 million euros. Atos said that this had been because of a contract with a financial institution based in Britain. Belmer stated that he would simplify the group’s governance, as he considers it overly complex. There are 21 executives on the management committee, including him, and he believes that it slows down decision-making, which can hinder performance. A spokesperson stated that they would provide details of the revamp after market closure.
He also confirmed that the BDS cybersecurity of the company was not for sale. Last week, there had been rumors that defense company Thales had been working on a plan of buying Atos. Former CEO Thierry Breton, who is now the industry chief of the European Union, had formed Atos, partly through a string of acquisitions. The company has deep links with the security industry in France and the state has the ultimate say in this sector over tie-ups.
Atos had also revised its guidance for 2022 downwards and said that its operating margin would be around 3.5%. It announced on January 10th that the margin would be 4%. It had now forecasted a decrease in revenue of 2.6%, as opposed to a previous forecast it had made of 2.4%. Atos will report its full-year earnings, update its targets for the second quarter and present the turnaround plan on February 28th. This would further shed light on how the company would move forward in the coming year and what could be expected of its finances.
