In a recent statement Rodolphe Belmer, the new CEO of Atos, promised to start over with a clean slate after the French IT consulting group took a total of €2.4 billion in writedowns in the second half of 2021. The announcement resulted in a 4.5% drop in the company’s stock value on the Paris market, making it a 14.3% decline for Atos for the year.
Last year proved to be a difficult one for Atos, with the firm being forced out of France’s CAC 40 benchmark stock index and losing half of its market value relative to a 33.7% gain for the industry index. Accounting errors and the failed acquisition of U.S. firm DXC Technology led to a loss in shareholder confidence and the departure of then-CEO Elie Girard.
Belmer committed Atos to a reorganization around three business units, as well as a revamp of its executive committee. Atos will be restructured around “tech foundations,” “digital,” and “big data & security” (BDS), with the new CEO declaring that the group’s BDS cybersecurity unit was not for sale; Reuters had recently reported that defense company Thales was working on a plan to purchase the firm.
Atos’ new leader also pledged to simplify the firm’s governance, which currently has a 21-member executive committee that has previously been described as overly complex and a hindrance to performance due to slow decision making. The company will further be streamlined around four geographic areas: Northern Europe & Asia Pacific, Central Europe, Southern Europe, and Americas.
On a call with analysts about the €2.4 billion in impairment charges, Belmer stated: “We have done the work comprehensively, thoroughly, and we have done it once and for all…We can now turn the page and look forward to a whole new chapter for Atos."
The impairment charges have had a significant impact on Atos, with a €1.9 billion writedown of its goodwill tied to a previous infrastructure acquisition and assets like data centers and IT equipment leases. The additional impairment charge of €500 million was for contract assets, reserves for bad debt, and provision for future losses. Overall the company has revised downward its guidance for 2021, reporting lower operating margins and decreased revenue.
While the current situation may appear bleak to investors, Atos plans to present its turnaround strategy and provide its mid-term targets in the second quarter, giving the group an opportunity to begin restoring shareholder confidence.