Atos revenue slips but UK growth up 3.7%

Revenue of Atos dipped 1.9% in the first half of 2014 because of slowdown in IT orders in Europe, but UK growth was up

French IT services and cloud provider Atos has reported a 1.9% dip in its revenue for the first half of 2014 because of slowdown in IT orders in Germany, France, Central Europe and the Nordics. But its UK growth for the same period rose, thanks to public sector contracts awarded by the Department of Health and NS&I.

Atos’s revenue for the period ending June 2014 was down to €4.17bn from €4.26bn in the same period last year, while its net profit plunged 34% to €76m from €116m in 2013.

Revenue from managed services, which formed 51% of the group, was down 2.3% from the last year to €2.13bn while revenue from its consulting & systems integration group at €1.5bn, was down 2.1%.

In the second quarter, Atos welcomes seven new large contracts together worth more than €500m. Three of these seven contracts came from the UK, including a five-year infrastructure management contract with a large postal and delivery company, a contract with Disclosure Scotland, an executive agency of the Scottish Government, and a 6-year financial outsourcing contract with National Savings and Investments (NS&I).

Growth in the managed services revenue in the UK was up 3.7%, “thanks to a positive dynamic in the public sector, mostly with business increase with the Department of Health and NS&I,” the company said while filing its half yearly earnings.

The company signed new contracts worth €500m in June alone, said Thierry Breton, chairman and chief executive of Atos.

Despite a slip in the revenue in the first half of 2014, analysts expect Atos’ growth to recover in the second half when its Bull acquisition will be approved.

Higher-value services with industry specialisation across Atos’ core verticals, especially in consulting & SI (C&SI), cloud, and customer centric sales model, will help Atos grow revenue through 2016, said Elitsa Bakalova, professional services analyst at TBR (Technology Business Research).

The French services supplier has offered to buy Bull for £502.6m (€620m) in a deal that could see the creation of one of the largest cloud services enterprises in Europe.

“The addition of Bull’s IaaS, PaaS and SaaS capabilities will enhance the Canopy cloud services portfolio and ramp up its growth with hybrid cloud, a core focus for Atos,” said Bakalova. “TBR expects Atos will achieve €700m in cloud revenue in the targeted 2016 time frame. Atos’ ability to keep clients’ data under European sovereignty helps the company effectively compete against non-European rivals.”

The acquisition of Bull will add more than 2,000 cyber-security specialists and €130m in cyber-security revenue to Atos, according to its estimates. “Atos will be able to catch up in the security space with competitors such as Accenture, IBM and HP, which are continually expanding their security practices to attract clients across the IT services life cycle,” Bakalova said.

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