Atos doubles net income
Atos Origin has reported a 118% increase in net income to 124.7 million euros for the first half 2008, on revenue up 7% at 2.74 billion euros.
The France-based company said systems integration revenue grew 7.5% to 1.11 billion euros, managed operations revenue rose 7.4% at 1.45 billion euros and consulting revenue decreased 1.6% to 179 euros.
Geographically, revenue from France grew 7% while UK revenue rose 12.1%. Revenue from the Netherlands decreased 1.4% while sales in Germany and central Europe grew 8.7% at E317m Revenue from the rest of EMEA grew 13.9% while Americas fell 20.4% and Asia Pacific grew 33.4%.
“We confirmed a strong commercial momentum with a double-digit order entries growth and we clearly came back to a revenue organic growth above the IT services market,” said Philippe Germond, chief executive at Atos Origin. “Therefore we have reached the first objective of our transformation plan and we continue to focus on the operational profitability improvement and the cash generation.”
“These results underline the company’s gradual return to form,” said Ovum’s Phil Codilng. “Over the last two years, Atos Origin has improved its rate of organic revenue growth versus the previous quarter in all but one quarter and the first two quarters of 2008 were no exception. This underlines just how badly the company performed in 2006, but it also shows that its more disciplined approach to winning and delivering IT services business (under the framework of its ‘303’ transformation programme) has borne fruit.
“Specifically, Atos Origin has become more effective in its sales activities. It is trying to be more selective in its bidding (which should help margins) but is achieving improved volumes too (book-to-bill ratio in 1H was 98%, compared to just 89% in 1H last year). Initiatives such as a push to train salespeople via its ‘ Sales University’ appear to be paying dividends. More generally, the company is trying to make itself more competitive (for example, by increasing its use of offshore resources) and this too appears to be helping sales.”
But there’s still work to be done. “Its margins are heading in the right direction, but at a snail’s pace,” noted Codling. “We wouldn’t be surprised to see the increased emphasis on offshoring accompanied by a renewed focus on onshore cost-cutting, for example. Productivity and efficiency could surely be improved too. While focusing on recruiting key skills and increasing its availability in lower-cost locations, the company will also need to continue to try to standardise and streamline its service delivery wherever it can. Its initiatives in this area to date, plus its IT emphasis on a more international, cross-border approach to business, bode well. IT services is evolving, and the determinants of success increasingly involve repeatable assets and processes.”