Atos should be congratulated for achieving broadly flat revenues in FY11 (+0.3% to Eur6,812m) while also tackling the massive challenge of integrating Siemens IT Solutions & Services (SIS). SIS has been within the fold for six months such that total revenue growth was 35.7%. The Group has also boosted the total operating margin from 4.3% in 2010 to 6.2%, meeting its forecast (see Atos H1: UK outperforms other geographies).
Looking ahead, the book to bill ratio improved in Q411 to reach 113% compared to 99% for the first nine months of the year. A similar organic revenue growth performance is forecast for 2012. The objective is to increase operating margin to 6.5%.
Atos can also hold its head up high in the UK & Ireland, with growth of 4.2% (to Eur1,195m) at constant group and exchange rates, beating both Capgemini (see Capgemini UK margins squeezed) and Logica (see Logica profits hit by restructuring) which both reported 2.0% growth. Capgemini had led the way at ‘half time’ with growth of 5.2% (H1) but the impact of its HMRC contract renegotiations hit home in the second half (see Capgemini update: HMRC Aspire has major impact). Actually, all three companies have done well to grow UK revenues considering the conditions they are facing in the UK public sector market. Atos’ UK revenue growth was only overshadowed by performances in Central & Eastern Europe and North America (both up c10%). The UK operating margin stood at 6.7% (behind Capgemini’s 7.4% reported yesterday) – this was a slippage compared to 2010 (constant scope and exchange rates) when it stood at 7.1%.
Digging deeper, the UK’s strong performance was predominantly as a result of its HTTS (high-tech transactional services) and Specialised Businesses, which grew 9.5% as a result of higher volumes in BPO and the ramp-up of new contracts. Managed services was also up (+3.5%) due to additional projects with major clients (this offset the impact of pricing pressure in the public sector). The inference is that SI and Consulting & Technology Services revenues were down slightly (or in Atos’ words “were almost stable”). We’ll have more analysis for TechMarketView subscribers after the concall later this morning (on HotViewsExtra).