No, the Capital Market Day of Atos will not have succeeded in reinforcing the confidence of the investors on the title, massacred for months. The price indeed corrects by 23% in session, after having plunged up to 27%. Early this morning, the IT services group announced the departure of the general manager, Rodolphe Belmer, in office since the beginning of the year only, whose ideas were in contradiction with those of the board of directors. This is the heaviest fall ever recorded for the title in session. In five days, the market capitalization has lost more than 40%.
Rodolphe Belmer and the board of directors disagreed on the fate of the BDS cybersecurity branch. The general manager wanted to separate this activity while the board of directors wanted to keep it. He will step down on September 30.
High cost
Atos now plans to split into two publicly traded entities and has appointed two deputy chief executives, Nourdine Bihmane and Philippe Oliva, to lead each. This split would “unleash value” as part of a larger plan, the cost of which is estimated at 1.6 billion euros in 2022-2023.
An amount that scared the financial community. “The restructuring will be painful and should not please investors in the short term, while what is left of Atos is expected to lose money until 2024”, firm Bryan Garnier told Bloomberg. “Apart from the departure of the CEO, the most negative announcement concerns additional investments to achieve medium-term ambitions, which translates into a weak free cash flow for two years”adds the analysis firm Oddo BHF.
The whole question is indeed how this plan will be financed. “The company needs 1.6 billion for a market capitalization of 2.2 billion euros in order to carry out the demerger and the transformation plan, which, with a sluggish cash flow, means a risk of non- compliance with borrowing covenants “says Citi.
Evidian, for cybersecurity and the cloud
Atos will sell non-strategic assets worth approximately 700 million euros. A 2.5% stake in Worldline has already been sold in this context, raising 220 million euros.
Atos plans to separate and combine BDS with its services operations, especially those concerning the cloud. Called Evidian, these activities generated revenue of 4.9 billion euros in 2021, up 5% year-on-year, and an operating margin of 7.8%.
The remaining part will include declining and loss-making IT infrastructure management services, whose turnover amounted to 5.4 billion euros last year. Atos has set itself the objective of returning to growth and profits for these activities by 2026.