New (since the beginning of the year) Atos UK CEO, Ursula Morgenstern, should have every reason to be smiling today. Not only does the day mark the start of the Olympics ‘proper’ (Atos is the prime IT partner), but with 6.7% like for like growth (to €812m), Atos UK moved up the rankings to become Atos’ second fastest growing market, behind North America (+8.6% to €275m).
Indeed, while Atos’ first half results were rather a mixed bag, both by geography and by service line (the latter still the primary P&L – Atos has not yet really got the ‘vertical thing’), the UK business shined in almost every respect: operating margins expanded by nearly a point yoy to 6.9%, ahead of the group aggregate 5.7% margin; systems integration revenues remained ‘solid’ vs a 2% decline at group level; HTTS (transaction processing) revenues grew by 20%; and Consulting revenues - previously a problem child for Atos UK – leapt 16%. The only apparent soft spot in the UK was Managed Services, which posted ‘slight growth’.
At group level, revenues grew (like for like) by 1.4% to €4.37b, with Germany remaining Atos’ largest market, growing by 6.2% to €840m. France, Benelux, and indeed much of the rest of Europe, were in decline. Atos group CEO, Thierry Breton, confirmed FY guidance of ‘slight revenue organic growth’ and a 6.5% operating margin.
But on the face of it, Atos grew slower (like for like) than archrival compatriot Capgemini (see Capgemini increasingly confident on outlook) and was less profitable. There are all sorts of things happening under the covers which we will explore in future analysis, but I still can’t help thinking that Atos’ undernourished global delivery capability is holding them back. Management simply don’t get it. Yet again, in today’s 42-page results presentation there is not one slide – not one – that talks about global delivery. Mind you, there’s also no mention of Atos’ ill conceived’ ‘Zero Email’ initiative either, so we do have something to be thankful for!
Much more soon for eligible TechMarketView subscription service clients, who should also take a close look at Georgina O’Toole’s excellent analysis of Capgemini’s UK performance here.