Atos has announced that it expects lower cash reserves over the coming years due to a weaker business environment affecting sales. However, the French IT company stated that this would not impact the main terms of its financial restructuring plan.
Atos, which has been a key player in Europe’s software and technology sector, has endured significant financial difficulties in recent years. In June 2024, it secured a restructuring deal with banks and bondholders. The company now forecasts its group revenue for 2024 to be €9.7bn, down from the previously estimated €9.8bn, representing a 4% decline compared to 2023. The group’s operating margin for this year is now projected at 2.4% of revenue, down from the earlier target of 2.9%.
Atos restructuring plan not in danger, says firm
Atos expects its leverage ratio to fall below 2.0 by 2027, delayed from the previously planned target of the end of 2026. A court hearing for the approval of Atos’ accelerated safeguard plan is scheduled for 15 October 2024. The restructuring plan, which could result in significant dilution for existing shareholders, is expected to proceed after court approval. It includes several capital increases and debt issuances planned between November 2024 and January 2025.
Last month, Atos reported a wider operating loss for the first half of the year due to impairment charges, reduced sales in the Americas, and a slowdown in public-sector orders in Europe. The company aims to achieve a BB credit profile by 2027, ahead of the end-2029 debt refinancing milestones. The timeline for implementing the financial restructuring plan remains unchanged.
For 2027, Atos forecasts group revenue of €10.6bn, down from the previously estimated €11bn. This represents a compound annual growth rate (CAGR) of 1.2% over the 2023-2027 period, compared to the earlier 2.3% projection. The operating margin for 2027 is now expected to be €1bn, or 9.4% of revenue, compared with the previous €1.1bn, or 9.9% of revenue.
The updated business plan considers current market trends, contract terminations, and delays in new contract awards as clients await the finalisation of Atos’ financial restructuring plan.
Atos expects positive free cash flow by 2026, though it is anticipated to be €215m lower than initially planned, with a positive cash position change of €138m before debt repayment.
Assuming full subscription to the €233m rights issue as part of the restructuring plan, Atos expects its leverage ratio to be 2.95 times by the end of 2026, compared to around 2.0 times previously.
Turmoil at board level
In July this year, Atos announced the resignation of its chief executive Paul Saleh in a market update. Saleh is succeeded in his position by the chairman of the board of directors, Jean-Pierre Mustier.
Mustier is the company’s fifth chief executive in as little as two years.
Prior to this, in the same month, Atos secured interim financing in tranches of €225m and €350m from lenders in a revolving credit facility.
Read more: The fall of Atos: What went wrong? And what happens next?
