2nd UPDATE: Atos Shares Up On Confirmed Guidance, Cost Control
29 July 2009 - 8:51PM
Dow Jones News
Shares in French IT services company Atos Origin (ATO.FR) rose
Wednesday as the company confirmed it still aims to improve EBIT
this year and showed it is keeping a firm grip on costs.
The Paris-based company, which manages the IT systems for the
Olympic Games, confirmed it still aims to improve earnings before
interest and tax by 50 to 100 basis points this year and expects
2009 revenue to fall about 2% to 3%, stripping out acquisitions,
disposals and currency movements.
The group also said it aims to accelerate margin improvement in
the second half with the help of its action plan under new Chief
Executive Thierry Breton, and still targets positive free cash flow
this year.
"We are confident in our targets but remain careful amid the
current environment," Breton said in a conference call with
analysts.
At 1017 GMT, Atos shares were up 4.7% to EUR29.55 as investors
responded to the positive effects of its restructuring and
cost-saving efforts.
The stock has gained about 58% since the start of the year as
investors have regained confidence in the group's ability to
improve margins after a year of radical management changes and
restructuring.
"The restructuring effect appeared faster than expected," Aurel
analyst Brice Francois Thebaud said, noting that the group realized
most savings through a sharp headcount reduction. He rates Atos
Origin at sell.
"Atos Origin should be one of the rare software and computing
services companies to improve its EBIT margin in 2009," CM-CIC said
in a research note. The brokerage rates Atos at add.
Atos Origin has undertaken a series of restructuring measures in
the past year and a half, accelerated by Breton when he took office
in February.
Still, EBIT fell 3.1% to EUR118 million in the first six months
of the year from EUR121.8 million last year. This was above an
average EUR114 million forecast by six analysts polled by Dow Jones
Newswires.
Atos said its first-half EBIT margin was 4.6%.
Excluding the impact of the insolvency of German retailer
Arcandor AG (ACAGF), which was one of Atos' clients, the group
improved its operational profitability by 50 basis points in the
first half, Atos said in a statement.
Revenue fell 2.3% to EUR2.59 billion from EUR2.65 billion last
year and in line with analysts' expectations of EUR2.59
billion.
Consulting revenues continued to decline most sharply, down 23%
in the second quarter, as companies cut spending.
Last year's EBIT and revenue figures are at constant exchange
rates and exclude Atos' Italian operations and Atos Euronext Market
Solutions, or AEMS, which the company agreed to sell in 2007.
Net profit dropped 89% to EUR14 million from EUR125 million last
year in the first half, notably due to higher restructuring
charges. Analysts had seen net profit at EUR15.4 million.
Net debt at June 30 stood at EUR328 million, compared to EUR304
million at the end of the last quarter.
Atos competes with European peers Capgemini (CAP.FR) and
U.K.-based Logica PLC (LOG.LN). Capgemini reports first half
results Thursday.
Company Web site: www.atosorigin.com
-By Ruth Bender, Dow Jones Newswires; +33 1 40 17 17 40;
ruth.bender@dowjones.com
(William Horobin in Paris contributed to this report)