(News Bulletin 247) – The digital services company, which is preparing to split into two in the second half, has raised its medium-term objectives for Tech Foundations, the entity that brings together its traditional activities such as outsourcing. In particular, the company expects to generate positive cash flow a year earlier.

Almost a year after an ubiquitous investor day – with a strategic plan presented by a CEO who will announce his departure the same day – and poorly received by the market, Atos takes stock.

Remember that the digital services company (ESN) intends to split into two this year, with on the one hand the so-called Tech Foundations activities, which bring together its historical businesses, such as outsourcing, professional advice, outsourced business processes , and on the other, new, fast-growing activities such as cybersecurity, big data and digital transformation. These latter activities will be grouped together in a new company, called Eviden, which is to be listed on the stock market in the second half of the year, via a distribution of 70% of its capital to Atos shareholders.

During the day dedicated to investors in June 2022, Atos gave objectives and a trajectory for each of these two entities. This Wednesday, the company updated the one concerning Tech Foundations, the entity that will become “the new Atos”.

“Tech Foundations is back”

This group of activities had recently shown relatively reassuring signs, with in particular a drop in its turnover limited to 1.6% last year on a like-for-like basis, after a plunge of more than 11% in 2021, and a return to a positive margin. Even if it is necessary to qualify the picture by emphasizing that the increasingly lenient basis for comparison obviously helps the group.

“Tech Foundations is back, we have put Tech Foundations back on the road to recovery”, declared in March, Nourdine Bihmane, the CEO of Atos, on BFM Business.

Atos on Wednesday significantly raised its addressable market estimate for these trades. While it estimated it at around 490 billion euros worldwide in June 2022, the group now places it at 705 billion euros.

“This shift addresses an expanded market for technology consulting and custom services, as well as new business areas in hybrid and multi-cloud infrastructure and enterprise digital platforms,” ​​the company explains.

Atos now distinguishes between the “core business” activities of Tech Foundations, weighing 4.5 billion euros, and the “non-core business”, which amounts to 900 million euros. These businesses include, for example, the outsourcing of business processes and the resale of hardware and software.

Above all, the group has raised its ambitions for Tech Foundations. Atos expects its revenues to reach the bottom of the pool in 2024 with around 5 billion euros (compared to 5.4 billion in 2022) before stabilizing in 2025 and then rising again in 2026. Atos previously forecast on a trough with a lower point, anticipating 4.1 billion euros in revenue in 2024.

Discussions with Kretinsky intensify

The company also revised its operating margin target, forecasting a range of 6% to 8% in 2026, from “more than 5%” previously. Cash generation before tax and interest charges would return to positive territory in 2025, a year earlier than expected. It would increase to more than 250 million euros in 2026, against 150 million euros in Atos’ previous forecasts.

Quoted by Reuters, Nourdine Bihmane also indicated that the asset disposal program of 700 million euros – operations necessary to finance the restructuring of the group – was almost completed.

On the Paris Stock Exchange, the market initially welcomed these announcements with enthusiasm, the Atos title taking more than 3% at the start of the session, before turning around. Around 10:30 am, the title yielded 2%.

Apart from these announcements, BFM Business also reported that Atos is intensifying its discussions with Czech businessman Daniel Krestinky, in view of the potential takeover of Tech Foundations. The company is said to be ready to leave around 600 million euros of cash in its accounts so that Daniel Kretinsky can finance the restructuring, compared to 400 million euros two months ago. In return for this effort, the Czech businessman would invest in Eviden during its IPO, up to approximately 200 million euros.

Contacted by BFM Business, Atos and Vesa Equity, Daniel Kretinsky’s holding company, did not comment.