UPDATE:Atos Origin To Return To Organic Revenue Growth In '11
October 13 2010 - 2:28AM
Dow Jones News
IT services group Atos Origin (ATO.FR) Wednesday said its
organic revenue will return to growth next year as the risk of
losing revenue from government spending cuts fades and the
situation across its markets continues to improve.
Having been hit hard by the financial crisis and resulting
economic downturn, which led to big customers delaying investment
and purchasing plans, Atos Origin has seen its clients start to
recover since the start of the year.
"The signs of recovery are becoming increasingly stronger," said
Deputy Chief Executive Officer Gilles Grapinet.
He added that worries about losing revenue because of government
spending cuts, in particular in the U.K., are now "behind us." The
group in September signed a memorandum of understanding with the
U.K. government, which will allow it to continue to deliver all its
existing IT contracts with the government.
However, some significant contract renewals in the U.K. were
postponed into the fourth quarter due to negotiations with the U.K.
government amid spending cuts, Atos said.
The situation in Spain continued to be difficult in the third
quarter, but France returned to growth and the situation in the
Beneleux is also improving as prices for new contracts in the
financial services sector are stabilizing, the group said.
Atos expects strong orders for the fourth quarter, aiming to
reach a book-to-bill ratio of at least 120%, which should lead to a
full-year book-to-bill ratio of 109%.
Order entries in the third quarter totaled EUR1.09 billion,
representing a book-to-bill ratio of 90%, compared to 89% in the
same period last year, Atos said.
The group, which competes with larger French rival Capgemini
(CAP.FR) and U.K.-based Logica PLC (LOG.LN), also slightly raised
its cash flow target for the year. Chief Financial Officer Michel
Alain Proch said the group should post net operational cash flow of
around EUR140 million this year. It had previously targeted cash
flow to be flat from last year at around EUR117 million.
Atos aims to bring its net debt close to zero by the end of the
year, unless it makes an acquisition, Proch said.
Atos confirmed its other targets for 2010. It still expects
organic revenue to decline slightly, largely due to the bankruptcy
of German retailer Arcandor, one of its clients. Organic revenue
declines should be slower than in 2009. It also still expects to
improve its earnings before interest and tax, or EBIT, margin by 50
to 100 basis points this year.
Still, third quarter revenue fell as consulting and managed
services business continued to suffer, notably due the hit from
Arcandor.
Revenue for the three months ended Sept. 30 totaled EUR1.21
billion, down from EUR1.23 billion in the same period last year. A
poll of 13 analysts provided by the company had forecast revenue at
EUR1.21 billion.
On a like-for-like basis, excluding currency fluctuations,
disposals and acquisitions, revenue fell 3.5% in the third
quarter.
Atos shares Tuesday closed at EUR33.44.
-By Ruth Bender, Dow Jones Newswires; +33 1 40 17 17 54;
ruth.bender@dowjones.com
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